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FiscalReps Newsletter October 2012 1st edition

What’s new – Premium Taxes Hungary – new Premium Tax for 2013

Denmark – filing date for the new Premium Tax

Czech Republic – proposed introduction of IPT

The Hungarian tax office has provided further clarity on the scope of the new premium tax which comes into force on 1 January 2013. It appears the tax imposes two rates: (1) a 15% rate on comprehensive vehicles (”casco”) premiums and (2) a 10% rate on “property and accident” premiums.

The tax office (SKAT) has confirmed that the submission dates for returns and payments will be 15th of the month following the month of account. Therefore the first returns and payments must be submitted by 15 February 2013.

The Ministry of Finance will be drafting legislation for the introduction of a general premium tax in the country. According to the recent decree the draft IPT legislation will be presented for approval to the Czech Parliament by 31 December 2013. Therefore the new tax could be introduced in 2014.

We understand the 10% rate will apply to Accident plus EU classes 7 to 9, and 11 to 18 and therefore is very wide in its scope. The new tax will not affect the 30% accident tax which we understand will continue. Several key aspects of the tax (including the classes taxed under the 15% rate) remain unclear and we are hoping to resolve these in a meeting with the tax office in October/November. Our recent alert on this tax can be found at: latest-news/tax-alert-introduction-ofa-new-premium-tax-in-hungary/

Our recent alert on this tax can be found at: latest-news/tax-alert-introduction-ofa-new-premium-tax-for-denmark/

Finland – proposed increase to IPT rate We understand that there is a proposal before the Finnish Parliament to increase the rate of premium tax by 1% from 23% to 24%. More information will follow as it becomes known.

Further information on any of these issues may be obtained from Nick Hammond t: +44 (0)20 7036 8070 m: +44 (0)7867 459 763 e:

What’s new – VAT VAT: EU: Reliance on Third Party Information Two judgments of the European Court of Justice (“ECJ”) on 6 September 2012 may assist insurers in recovering input VAT related to business written for non-EU policyholders. It is important that the insurer checks the location of the policyholder to drive input VAT recovery, and in general reliance will be placed on information from that policyholder or from the broker. The cases of Gábor Tóth Case 324/11 and Mecsek-Gabona Kft Case C-273/11 were referred from Hungary. Although the facts were different, the principles set out by the Court indicate that the tax authority may not challenge such reliance provided it is established in good faith.

VAT: UK: Finance Leases We understand that HMRC is considering changes to the VAT treatment of finance leases. Such arrangements are currently treated as supplies of services but they may in future be treated as supplies of goods. This would mean that lessees would no longer incur the VAT on the periodic payments under the lease but may need to find all of the VAT upfront at the start of the lease – as the lessor would need to account for this to HMRC the new treatment is likely to be similar to that for hire purchase. Alternatively the lessor may finance the VAT cost but this would increase the cost of the finance. The revisions arise from the ECJ ruling in Eon Aset Menidjmunt OOD, Case C-118/11. Insurers should consider whether to bring forward major finance lease acquisitions as the existing treatment is likely to continue for the life of any existing lease, thus spreading any VAT cost.

VAT: UK: Self Storage Insurers should be aware that from 1 October 2012 VAT will be applied to rents for any premises that are used predominantly for storage – for example archiving. If VAT is not already being paid this may add to the cost of such premises.

VAT: Spain: Increase in Rates With effect from 1 September 2012 the standard rate of VAT in Spain has been increased from 18% to 21%, whilst the reduced rate was increased from 8% to 10%.

VAT: Netherlands: Increase in Rate With effect from 1 October 2012 the Dutch standard rate will increase from 19% to 21%.

VAT: Czech Republic, Denmark, Finland, Ireland, Netherlands, Sweden and UK: VAT Grouping On 5 and 6 September 2012 the ECJ heard the arguments of the above countries concerning their implementation of VAT grouping – allowing non-taxable persons to join, only applying VAT grouping to certain business sectors, and failing to notify the VAT Committee of changes to the Dutch implementation. Oddly, the Commission is not taking action in relation to its interpretation that a VAT group is a separate taxable person even though some of the above countries, and many others, do not apply that view.

VAT: St Lucia: Implementation St Lucia implements a brand new VAT system on 1 October 2012, one of the last Caribbean countries to do so. There will be a standard rate of

15% and an introductory reduced rate of 8% for hotel goods and services. Financial services, including insurance, will be exempt. Further information on any of these issues may be obtained from Peter Hewitt t: +44 (0)20 7036 8070 m: +44 (0)7767 884 346 e:

Coming up Tax authority meetings In October / November we plan to hold meetings with the tax authorities in Denmark, Hungary and Iceland. Please contact us if you have any indirect tax concerns in these countries and we will endeavour to include them in the discussions. FiscalReps VAT Seminar To introduce the new VAT team and discuss key VAT issues currently affecting the insurance industry. Date: Thursday 11th October Time: 4pm Venue: 10 Fenchurch Avenue, London EC3M 5BN FiscalReps’ 7th Annual Indirect Tax Forum Date: Friday 23rd November Time: 8.45am - 3.30pm Venue: Trinity House, Tower Hill, London EC3N 4DH Reserve your free place at the FiscalReps VAT Seminar and / or Annual Indirect Tax Forum by emailing Rebecca Taylor at


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