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FiscalReps Newsletter May 2013 8th edition

What’s new – Premium Taxes Italy - Reporting of Premiums, Contracts (Policies) and Claims Further to our recent communications on Premiums, Contracts and Claims Reports in Italy, the Italian Tax Office announced on 30 April that the data fields requested for Premiums 2012 and Contracts 2012 reports will be changed. Furthermore, the original deadline of 30 April 2013 for submission of the 2012 reports for Premiums and Contracts has been extended to 4 December 2013. For Claims Reports there is an unofficial extension to 31 May. For future years all deadlines will revert to 30 April. For any specific queries please contact our Italian Country Specialist, Susie Crew t: +44 (0)20 7036 8070 e: Croatia – Meeting with Croatian Insurance Trade Association FiscalReps met the Croatian Insurance Bureau last month to discuss Croatia’s accession to the EU and the subsequent implications for premium taxes. It is our understanding that FOS insurers will be required to file and settle Croatian premium taxes with effect from 1 July 2013 in accordance with Article 6 (1)

of the Insurance Act. The Insurance Act will be shortly updated but we are not sure what amendments have been made yet. FiscalReps has identified eight potential premium taxes (and rates) that may apply to the relevant classes of insurance business. These are: 1. Motor IPT (10% & 15%) 2. Motor Third Party Premium Tax (4%) 3. Fire Brigade Tax (5%) 4. Forest Contribution (0.0525%) 5. Health Tax (but this may be another name for the Motor Third Party Premium Tax) 6. Tourist Levy (0.25%) 7. Monument Annuity (no further details at present) 8. Contribution to the Croatian Chamber of Commerce (this appears to be a direct tax rather than a tax on insurance transactions) FiscalReps contacted each of the tax authorities to confirm our understanding about the premium taxes, rates, registration process, returns, settlement etc. Unfortunately, we have not received any responses and we are concerned that the tax authorities may not be ready for the EU accession. FiscalReps will keep you updated on any progress.

Denmark – Meeting with SKAT and Storm Council On 2 May FiscalReps met with the Danish tax authority (SKAT) and the Danish Storm Council for a discussion of Danish premium taxes and the Storm Flood Levy. The discussions, which centred on our database of taxes, were friendly and productive and both authorities provided verbal agreement to our tax rate databases. Dublin Forum On 19 April FiscalReps hosted the second part of our European Forum tour in Dublin, Ireland. Presentations included the “Life of a tax liability” from creation to settlement, recent developments in European IPT, a focus on Spanish premium taxes (including the implications of the decision to decentralise the collection of IPT) as well as update on VAT cases throughout Europe. See details of this event at

What’s new – VAT EU - VAT groups In the April edition of FiscalPress we reported the trail-blazing judgment of the European Court of Justice (ECJ) in European Commission v Ireland Case C-85/11. We are pleased to confirm that the ECJ has now ruled the same applies to VAT grouping in the UK, the Netherlands, Finland, Denmark and the Czech Republic. Member States are therefore free to allow holding companies, dormant companies and any other non-taxable persons to belong to a VAT group registration if they think fit. As the Irish government argued, if this was not allowed it would be necessary to monitor the trading status of each member of a VAT group and to incorporate rules on when such members cease to be eligible. In addition to the above, the European Commission had taken action against Sweden and Finland for allowing VAT grouping only to providers of financial and insurance services, but in this action too it was defeated – see Case C-480/10, Commission v Sweden. We can expect Sweden and Finland to continue with their restrictions as they successfully argued they are in place to prevent tax evasion or avoidance. The judgments were based on a straightforward reading of the EU law, which in English states that “…each Member State may regard as a single taxable person any persons established in the territory of that Member State…” A literal reading of “a single taxable person” does not support the Commission’s view that a VAT group creates a “separate taxable person” from each of its members, and so perhaps there will be no action against the UK and other countries which do not regard a VAT group as independent of its members. However, this point may be addressed in a new case before the ECJ, that of Skandia America Corporation Case C-7/13, which essentially asks whether services bought in by a US head office and supplied on to a VAT group in Sweden should be taxed.

EU - Petroma - Purchase invoice details The ECJ has given a surprising ruling in the case of Petroma Transports SA Case C-271/12. The Belgian tax authorities had refused deduction of input tax because certain inter-company invoices for supplies of staff did not include all the required information, lacking unit price and/or number of hours worked by the staff. The ECJ found that the Belgian position was justified. Further it was not possible for the businesses concerned to rectify the invoices after the assessment had been made by the tax authorities, even though the output tax remained payable. This judgment shows that it is essential for purchasers to ensure they have invoices showing the required details before claiming input tax. If they do not, they should revert to the supplier immediately, and preferably before paying the invoice. The required details are set out in the VAT Directive at Article 226. UK/Gibraltar - WHA Supreme Court Judgment On 1 May the Supreme Court gave judgment in the long-running case of WHA, dismissing the appeal on the simple grounds that garage repair services are made to the insured and not to any other party (insurer or claims handler). The arrangements were complicated, with the insurer NIG reinsuring 100% of its risk to Crystal in Gibraltar, Crystal retroceding 85% of its risk to Viscount another Gibraltar reinsurer, and WHA in the UK undertaking claims handling and recharging Viscount. Looking at the complex arrangements as a whole, the Court saw no indication that WHA’s role as claims handler included taking responsibility for the repair work, and the nature of the relationship between the insured and the repairing garage indicated that the insured was the recipient of the repair services. Further, NIG undertook to reimburse the insured, rather than to undertake responsibility for the repairs itself. The case further highlights the need to understand the direction of supplies when considering claims costs.

Luxembourg - Increase in VAT rate From 1 January 2015 Luxembourg is set to lose a lot of VAT revenue from new rules which aim to tax electronically-supplied services to private customers where the customer is located. Currently Luxembourg benefits from a concentration of suppliers of such services, who pay the lowest rate of VAT in the EU – just 15%. The Prime Minister has announced plans to increase this rate from 2015, though he pledged that it would remain the lowest in the EU. The next lowest rate is 18% in Malta. Israel – Increase in VAT rate It has been announced that the VAT rate will be increased from 17% to 18% with effect from June 2013. Japan - Increase in VAT rate Japan is finalising plans to double its consumption tax rate from 5% to 10% in two stages by October 2015. The first rise will be in April 2014 to 8%. Further information on any of these issues may be obtained from Peter Hewitt or Nick Hammond t: +44 (0)20 7036 8070 e: / VAT TRAINING COURSES! VAT Basics - 24 June 2013 VAT Intermediate - 25 June 2013 VAT Advanced - 26 June 2013 For more information visit or contact Rebecca Taylor e: t: +44 (0)20 7036 8070 AIRMIC ANNUAL EXHIBITION 2013 - VISIT US AT STAND 79 FiscalReps will be exhibiting on 10-12 June at the Brighton Centre. If you would like to arrange a meeting please contact: Karen Jenner e: t: +44 (0)20 7036 8070

European Forums

FiscalReps’ Tour of European Forums - Insurance Premium Tax update In 2013, to celebrate ten years in business, FiscalReps is completing a European tour of Forums. Forums will be held in London, Dublin, Zagreb, Munich, Madrid, Milan and Paris. Our Forums will give you the opportunity to hear some of the world’s leading IPT experts talk about IPT across the EU and quiz them about your company’s IPT compliance. It will also enable attendees to bring their IPT knowledge up-to-date and equip them with the skills to manage their company’s IPT compliance. The Forums are free to attend. To register your free place at any of the forums please contact: Ruth Thompson | t: +44 (0)20 7036 8070 | e:

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16th April London, United Kingdom - VAT Forum 19th April Dublin, Ireland - IPT European Forum 22nd April Zagreb, Croatia - IPT European Forum 27th June Frankfurt, Germany - IPT European Forum


25th July Madrid, Spain - IPT European Forum


27th September Milan, Italy - IPT European Forum


14th October Paris, France - IPT European Forum

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t: +44 (0)20 7036 8070 | @fiscalreps