Tax and regulatory news

TMF Group's Insurance Premium Tax (IPT) news update As TMF's head of Global VAT, Richard Asquith, points out, "After last month's reduction in the number of insurance taxes, the taxman has been getting very energetic again with a range of hikes and new levies." In Belgium, the portion of National Institute for Health Disability (INAMI) parafiscal charge for accident at work risks charged to the insured has been reduced. In France, IPT on conditional health contracts has been increased, and there is a new tax on life insurance premiums. The proposed new UK flood levy may miss its 2015 implementation date. There have been changes to various Italian parafiscal charges for 2014, and changes to motor IPT rates. Hungary has complicated the calculation methodology of new IPT levy. In the Republic of Congo, IPT has been increased. St Kitts has seen changes to IPT filing and payment dates. Ghana has extended VAT net to include non-life insurance premiums. French Polynesia has increased its insurance tax rate. The Cook Islands has raised VAT on insurance premiums. Honduras has raised VAT on insurance premiums. hideIPT changes in Europe-Fiscal Reps The following Insurance Premium Tax (IPT) changes have been highlighted by Fiscal Reps: Denmark: On December 20 2013, the Danish Parliament approved an increase in the Environmental Contribution that is due on certain motor third party liability policies. As from April 1 2014 the contribution will increase from its current rate of DKK60 per insured vehicle per year to DKK101 per insured vehicle per year. The official notice confirms that the increased rate will not apply retroactively and provides examples of how the current and new rate will operate in the transitional period. For example, if a single annual premium is billed in the first quarter 2014 for the whole of 2014, the contribution payable is DKK60 for the year. However, if a premium is billed twice per year, the first instalment in the first quarter, then DKK30 is due at the first receipt (DKK5 x 6 months) and DKK50.5 (DKK8.41 x 6 months) at the final instalment. Slovenia: FiscalReps has entered into a dialogue with the Slovenian Tax Office and the Slovenian Trade Body (SZZ) over the last few months to determine how IPT should be applied to insurance classes 7, 10, 11, 12 and 14 in accordance with the IPT legislation. There is a degree of uncertainty in relation to International Goods in Transit and International Carriers Liability. Market practice has been to apply an exemption to these sub classes. The SZZ considers that insurance classes 7, 10, 11 and 12 are subject to IPT. Furthermore the SZZ considers that export credit/class 14 should continue to be treated as exempt. Iceland: On January 9 2014 the Icelandic Ministry of Finance announced a number of significant changes to Icelandic stamp duty. From January 1 2014 stamp duty will no longer apply on insurance contracts and any policies issued on or after this date will not be subject to stamp duty. A new stamp duty Act was approved by Parliament on December 19 2013, under which stamp duty applies only to transfers of real property and vessels over 5.00 gross tonnes. This Act replaces and repeals the old stamp duty Act (Act No. 36/1978) under which insurance contracts were taxed. Italy: The statutory rate of interest charge applied to late payments of IPT will change to 1% from January 1 2014. The new rate has only to be applied for the period from January1onwards. The older rates of interest (e.g. 2.5% for the period January 1 2012 to December 31 2013, 1.5% for the period February 28 2011 to December 31 2011) will also apply if an IPT payment relates to earlier periods. VAT changes highlighted by Fiscal Reps The following VAT changes have been highlighted by Fiscal Reps: Cyprus: The standard rate of VAT was increased from 18% to 19% with effect from January 13 2014. New Zealand: From April 1 2014 there will be a new facility for non-resident businesses to register for Goods and Services Tax (GST). General insurance is subject to GST at 15% in New Zealand and this development could mean that insurers without a place of business in New Zealand may need to comply. It should also be possible to recover GST on costs, including claims costs, if this has not already been claimed by the policyholder. The Cook Islands: A proposal to increase the VAT rate from 12.5% to 15% from April 1 2014 will bring the VAT rate into line with the GST rate in New Zealand, of which it is a protectorate. Insurance Europe comments on IAIS G-SII capital requirements The basic capital requirements (BCR) that will be developed by the International Association of Insurance Supervisors (IAIS) for global systemically important insurers (G-SIIs) need to strike the correct balance between risk-sensitivity and complexity, according to Insurance Europe. In its response to the IAIS consultation on the BCR proposals, Insurance Europe said that on the assumption that the BCR is temporary, it supports a factor-based approach to its measurements. Such an approach would combine certain risk measures and factors, in order to be able to calculate the level of capital needed. "It is vital that the BCR measurement system correctly recognises the long-term nature of insurance liabilities and insurers' ability to invest long-term, so that insurers can continue to manage their risks in the best way possible. The BCR must not create pro-cyclical behaviour," said Olav Jones, deputy director general of Insurance Europe. "Any unintended negative effects created by the BCR on the investment behaviour of these large G-SIIs would be detrimental to the stability and health of the wider economy." Israel and Mauritius sign IAIS information exchange agreement The insurance supervisor of Israel has joined an international supervisory cooperation and information exchange agreement. There are now 36 jurisdictions admitted as signatories to the International Association of Insurance Supervisors' Multilateral Memorandum of Understanding, representing more than 54% of worldwide premium volume. The insurance supervisor of Mauritius has also recently signed the IAIS Multilateral Memorandum of Understanding. Croatian tax authorities confirm premium taxes for FoS insurers FiscalReps has received an official response to its queries from the Head of Indirect Tax at the Ministry of Finance (MoF) and from the National Protection and Rescue Directorate (NPRD) in relation to Motor IPT/Fire Brigade Contribution (FBC). The MoF confirmed that insurance companies registered in the EU that conclude insurance policies in Croatia under FoS in relation to optional motor hull insurance (Class 3) and compulsory third party motor liability insurance (Class 10) are required to file/settle Motor IPT at 10% and 15% respectively. Furthermore, the NPRD requires FoS insurers to settle the 5% FBC in relation to all policies that cover fire risks. FiscalReps understands that these are the only premium taxes that apply to FoS insurers. Local premium taxes such as the Forest Contribution, Tourist Levy and Monument Levy have dated legislation (no reference is made to the EU) and should not apply to FoS insurers. Fiscal Reps pointed out, however, that domestic insurers, including branches and subsidiaries of FoS insurers, are required to pay all premium taxes in Croatia. FoS insurers have an obligation to settle Motor IPT and the FBC with effect from July 1 2013 or when it made the first taxable supply in Croatia; whatever is the later date. FoS insurers may appoint a fiscal agent to file/settle premium taxes on their behalf or file directly to the Tax Authorities, although there is no obligation to appoint a fiscal agent, said Fiscal Reps. "The Croatian tax authorities have remained silent in respect of interest and/or penalty charges for any late filings/settlements," said Fiscal Reps. "Our local associates advise that penalties should not be imposed but it is possible that a 12% (approximate value) penalty interest charge could be applied. FiscalReps will seek clarity around this point and remind the Tax Authorities about the repeated representations made on behalf of our clients since April 2013 and the subsequent response received eight months later." San Marino publishes IPT regulations The Republic of San Marino has published regulations covering the detailed compliance requirements of the new Insurance Premium Tax (IPT) which became effective on December 1 last year, according to Fiscal Reps. Foreign insurers that are registered with the Central Bank (the national insurance regulator) and are writing risks in San Marino are required to appoint a local fiscal representative. Other requirements include IPT payment at quarterly intervals (by end of month following each quarter end) and an IPT return which is due annually by May 31 of the following year.

Tax and regulatory news

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