2019 IPT changes in Denmark, Ireland, Slovakia, Spain, France, Italy

The new year has brought changes that affect insurers writing cross-border business across the EU. Some territories have introduced new requirements, or amendments to existing obligations that necessitate the amendment of reporting procedures for insurers.

Here’s a summary of some of the changes that have recently come into force, or are scheduled for 2019.

Denmark – Guarantee Fund for Non-Life Insurance Undertakings

Act no. 375 of 1 May 2018 amended the Danish Guarantee Fund for Non-Life Insurance Undertakings Act. All non-life insurers (excluding reinsurers) which have their head office in EU/EEA countries, are required to be a member of the Fund if they wish to carry out insurance business either by establishment of a branch, or by Freedom of Services in Denmark. The Act came into force on 1 January 2019.

Entrance fee

There is an entrance fee to become a member. According to guidance from the Danish Financial Supervisory Authority, EU/EEA non-life undertakings that are authorised to carry out business via Freedom of Services in Denmark in 2019 shall pay an entrance fee to the Fund no later than 1 March 2019. The entrance fee shall be submitted in a lump sum amount and be no less than 100,000 DKK. 

EU/EEA non-life undertakings that underwrite the following types of private line insurance policies in Denmark, with the policies issued from 1 January 2019, should calculate 50 DKK per policy for their entrance fee:

  • Motor liability insurance (motorforsikring)
  • Household contents insurance (familieforsikring)
  • Property insurance (husejerforsikring)
  • Health insurance (sundhedsforsikring)
  • Latent defect insurance – Change-of-ownership (ejerskifteforsikring)
  • Property sellers liability insurance (saelgeransvarsforsikring)
  • Structural warranty insurance – New build (byggeskadeforsikring)

If the sum of the calculation is less than 100,000 DKK, a lump sum amount of 100,000 DKK is required. If the sum of the calculation is above 100,000 DKK, the actual amount will be due.

Insurers that have not written any of the above types of policies in Denmark are required to pay an entrance fee of 100,000 DDK.

Insurers that are authorised to carry out business in Denmark, but have not written any policies in Denmark, are also obliged to pay the 100,000 DKK entrance fee.

Contribution for 2019 – ‘member fee’

A contribution of 40 DKK per policy is applicable on the abovementioned private line insurance policies which are issued from 1 January 2019 or renewed after 1 January 2019.So for example, a one-year insurance policy that was signed before 1 January 2019 but renewed after this date is subject to this contribution. The underwriting date or renewal date determines when the contributions are due.

Changes to an existing policy, which requires issuance of a new policy are also subject to the contribution. The contribution will be reviewed depending on the budget of the Fund.

If you require any assistance with the Fund, TMF Group’s IPT Compliance team will be happy to assist. IPT Quote has been updated to cover the contributions due going forward on the specified lines of business.

Denmark – Tax on Pleasure Craft Insurance

In accordance with the 2019 Finance Act, the tax rate has been reduced on pleasure craft insurance in Denmark. The rate reduced from 1.34% of sum insured to 1.00% of sum insured on 1 January 2019. Premiums due on or after this date will be taxed at the new rate.

Spain Consorcio – New reporting requirements

As you may be aware, Consorcio (CCS) introduced new reporting requirements for all insurers from January 2019. This is a move towards the digitisation of tax reporting in Spain, in line with measures affecting other areas of taxation in Spain and across Europe as a whole. TMF Spain has had numerous discussions with Consorcio to better understand the new requirements.

Each month, on the 20th, each insurer is required to submit a file to Consorcio, containing all policy transactions from the previous month (a line per policy and location). The Consorcio will review the data received and if the file submitted is correct, CCS will issue the forms for approval after that, the insurer confirms with the CCS the acceptance and the CCS will debit the nominated bank account of the insurer based upon the data received (Winding-Up Fund, Extraordinary Risks). In case of mistakes, the data file submitted would be rejected. As Consorcio will be debiting surcharges based upon these reports it is vital that they are submitted accurately and comprehensively.

An additional transitional period for insurers to prepare for the new requirement has been approved by Consorcio, enabling insurers to continue the test phase until the June 2019 submission, which is due on 20 July 2019. If you have any questions or concerns about the new requirements, make an enquiry with us today. 

Consorcio Environment Damage Fund

Businesses whose activities carry a risk of environmental damage are now required to contribute 8% of their insurance premiums to the Consorcio Environmental Damage Fund, according to the Consorcio Resolution dated 31 October 2018. This specifically applies to businesses that use an insurance contract to cover the risks of environmental damage.

Insurers are held responsible for collecting the contribution from the insured and submitting the amount to the Consorcio. EU/EEA insurers who carry out business in Spain either by an establishment or Freedom of Services are also included within this tax regime. TMF Group is able to assist insurers with the filing of this new contribution if required.

The Resolution took effect on 1 November 2018.

France – Payment Protection Insurance

The exemption for Death coverage as part of Payment Protection Insurance has been removed as part of the 2019 budget law. Such coverage is subject to IPT at the standard rate of 9% for contracts issued on or after 1 January 2019.

Italy – Changes to Prepayment

In the 2019 Italian Budget (Law 145/2018 Legge di Bilancio 2019), recently ratified by Parliament, changes to the upcoming IPT prepayments were announced. The updated prepayment rates are as follows:

  • For 2019 (to be offset in 2020) the rate will be 85%
  • For 2020 (to be offset in 2021) the rate will be 90%
  • Thereafter, the rate will be 100%.

The deadline of 16 November is not affected by these changes. We will be contacting our clients ahead of the deadline to ensure timely settlement of the prepayment.

Slovakia – IPT

Since 1 January 2019, a new Slovakian IPT regime has been in force. This has replaced the existing Premium Levy which had been in force since 1 January 2017. 

Slovakian IPT, unlike the Premium Levy, is paid by the insured and administered by the insurer (insurer collects IPT alongside the premium from the insured, before arranging onward settlement to the authorities); the characteristics are more akin to the IPT regimes around the rest of Europe. 

If an insurer requires registration and ongoing compliance services in Slovakia, TMF Slovakia supported by our team of IPT specialists in the UK can help. 

Ireland – Motor Insurers Insolvency Compensation Fund

The Irish Government has approved the Insurance (Amendment) Bill 2018 to introduce a new compensation fund – Motor Insurers Insolvency Compensation Fund (MIICF).

The contribution to MIICF is payable by all motor insurers operating in the Irish market to the Motor Insurers’ Bureau. The percentage rate of the contribution is set at 2% of the “assessable amount”. According to the Bill, the “assessable amount” means gross premiums paid to the motor insurer that cover not only motor risks (hull and motor third party liability), but also accident risks, carrier’s liability or risks related to Goods in transit underwritten in addition to a motor policy.

The contribution rate will be subject to an annual review by the Minister and may be varied between 0% and 3% depending on whether the MIIC fund reaches its budget.

Talk to us

TMF Group’s IPT team located around the continent continually monitor news sources and liaise with the local authorities to help make sure that our clients are fully prepared for whatever new challenges are presented by changes in the administration of premium taxes.

Need more information or have questions? Contact us today.

Compliments of TMF, a member of the EACCNY