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18th of May 2012

News

IPT remains key challenge for insurers

Vicky Beckett 06/09/2011

Insurance premium tax rates are likely to rise following European governments’ bid to increase revenue.
 
Tax compliance consultancy FiscalReps believes despite changes to IPT compliance requirements to simplify procedures, IPT remains a major challenge for insurers throughout the European Union (EU).
 
Mike Stalley, Fiscalreps CEO, warns against potential financial penalties and reputational damage “The rises in IPT rates in the UK and the Netherlands this year are likely to be followed by other governments,” he said.
 
Stalley said: “The key trends are governments’ increasing focus on IPT as a source of revenue and the EU-inspired abolition of compulsory local fiscal representation.
 
“With the increasing focus on indirect taxation, tax on premiums is inevitably attractive to revenue authorities, especially in today’s difficult economic climate.
 
“Revenue authorities across Europe are becoming increasingly vigilant and, as a result, compliance failures are more likely to be spotted – and penalised.
 
“The need to appoint a local fiscal representative in each jurisdiction has often been regarded as an unnecessary burden to tax compliance, and the European Commission now considers this requirement a breach of EU competition legislation.
 
“The UK, Belgium, France, Italy and the Netherlands have already dropped the requirement for IPT payment through local fiscal representatives and other countries are expected to follow.”
 
Stalley believes this is deceptive, potentially giving the impression insurers can safely avoid local fiscal representation where no longer a legal requirement.
 
“IPT is extremely complex and specialist assistance based on expert local knowledge is vital for achieving trouble-free compliance in every jurisdiction. Alternative arrangements, with risks of compliance failure, could prove costly and damaging to an insurer.”
 
Stalley will discuss his views on the future for IPT compliance within the EU along with a detailed update of all EU IPT regulatory changes at two free FiscalReps briefings hosted in Denmark on September 21 and the Netherlands on September 22.

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