How taxDNA® helped a captive manage IPT costs
A major fast-moving consumer goods multinational corporation (FMCG) owned a captive which was used to underwrite its global property portfolio. Given the size of the property portfolio and premiums, the insurance premium tax (IPT) due was considerable and any tax errors were likely to be material to the captive’s financial performance. IPT regulations across the European Union are complex but for FMCG it was essential to be able to identify the full cost of insurance, including premium taxes, in an ever-changing corporate environment. Furthermore, compliance failures can be costly as in many countries penalties and fines are punitive when mistakes in tax calculations are made. Many tax authorities are viewing IPT as a source of revenue growth and are taking much greater interest in the tax compliance affairs of their captive insurer taxpayers. Insurers writing business within the European Union have the primary responsibility for IPT compliance. FMCG, having already engaged with FiscalReps to outsource all of its IPT compliance requirements within the European Union, decided to acquire a number of licences of taxDNA® on a flexible Software-as-a-Service (SaaS) basis.
FiscalReps quickly trained FMCG’s risk managers and brokers to use taxDNA®. FMCG now uses taxDNA® to calculate all relevant premium taxes at renewal, and for any mid-term adjustments, basing IPT calculations on FiscalReps’ in-house maintained tax rate database. By using taxDNA® FMCG quickly obtained a professional level knowledge of all European Union IPT rates and was immediately able to calculate IPT due on premiums written accurately and consistently, ensuring that no compliance failures were suffered. FMCG was able to save time by having a simple IPT calculation tool at its disposal to calculate taxes quickly and was able to save money by taking advantage of the flexible contract terms offered by FiscalReps under the SaaS license option. FMCG has subsequently expanded the use of its captive to underwrite corporate casualty business and is using taxDNA® to calculate IPT on these programs.
Why FiscalReps? Since formation in 2003, FiscalReps has been the market leader in the field of international IPT compliance, providing robust compliance solutions for over 200 clients, including many of the worldâ€™s largest insurers and captive owners. With qualified professionals in the areas of finance and insurance, and with extensive experience gained both in the London market and internationally, FiscalReps is able to harness technical skills and market experience to deliver a robust but common-sense IPT compliance solution.
FiscalReps offer a suite of products encompassing Outsourcing, Technology, Consulting and Training solutions to assist clients in achieving and maintaining global compliance. Mike Stalley FCA, Chief Executive, founded FiscalReps in 2003 after experiencing at first hand the difficulties involved in achieving international premium tax compliance. To find out how FiscalReps can give you certainty surrounding your organisationâ€™s IPT compliance obligations, please contact us. We can also speak to you in French, German and Spanish.
10 FENCHURCH AVENUE LONDON EC3M 5BN UK T +44 (0)20 7663 5672 | MIKE.STALLEY@FISCALREPS.COM | WWW.FISCALREPS.COM
a captive manage IPT costs c a s e s t u d y WWW.FISCALREPS.COM A major fast-moving consumer goods multinational corporation (FMCG) owned a...