Page 1


FiscalReps Newsletter June 2013 9th edition

What’s new – Premium Taxes Spain – important changes to reporting of IPT in Navarra, Alava, Guipúzcoa and Vizcaya

to the IPT returns required to be filed with the Central Tax Administration in Madrid) and;

Further to our recent Alerts and Newsletters, the province of Navarra and the Basque provinces of Alava, Guipúzcoa and Vizcaya require all insurers that write insurance business into Spain, either on a domestic or FOS basis, to file and settle the relevant IPT directly with the four Provinces rather than Madrid. Although this is a legal obligation from 1981, the provinces have not exercised their rights under this legislation until now, with FOS insurers and domestic insurers adopting the market practice of settling all Spanish IPT centrally to the Hacienda in Madrid. We understand the ‘trigger’ for this recent decision to actively enforce this legislation is that the four Provinces are no longer receiving any tax revenue from Madrid.

2. Taxpayers must regularise their IPT position back to 1 January 2009. With regard to the regularisation, FiscalReps have agreed a bespoke arrangement with Navarra that no penalty or interest charges will apply to any of our clients as long as each client regularises its position before 30 September 2013.

a) Navarra

This legislation is not optional and any non-compliance may result in interest and penalty charges, which are expected to be in line with local rather than national Spanish legislation. Navarra will update FiscalReps on its penalty and interest regime shortly. Furthermore, to ensure full compliance, Navarra will carry out an ‘estimation exercise’, conducting

FiscalReps met the tax authorities, the Hacienda, in Navarra on 9 May 2013 and can confirm the following: 1. All IPT taxpayers must file IPT returns in Navarra (including ‘nil’ returns) (these are in addition

The taxpayer must identify whether any IPT paid to Madrid should have been paid to Navarra in accordance with the Location of Risk rules. These appear to be consistent with Article 2 (d) of the Second EU Non-Life Directive. FiscalReps have agreed a process with Navarra to regularise the position between the Central Administration and Navarra.

a trend analysis based on national figures. If it is estimated that any IPT is due then an assessment will be raised. b) Alava, Guipúzcoa and Vizcaya We understand that these provinces will act on similar provisions and we are currently in dialogue with each province to confirm the detail, but it is hoped that the IPT reporting and payment requirements will be aligned with those of Navarra. This should bring some consistency to an uncertain situation, introducing a single change to our clients’ IPT filing arrangements, rather than multiple changes over an extended period. FiscalReps are already in dialogue with these provinces and where possible we will try to ensure that a consistent approach is taken. We would hope that they will not insist on retrospective correction, but it is likely they may follow Navarra on 2. above. Please contact your Client Director or Paul Chater if you have any questions regarding any of your tax compliance requirements. t: +44 (0)20 7036 8070 e:

FiscalReps Masterclass – An update on the changing landscape of Spanish IPT Invitation to all FiscalReps clients currently registered as taxpayers for IPT in Spain and of note to clients that may need to register as taxpayers for IPT in the future. Free to attend. Date: 20 June 2013 Venue: 10 Fenchurch Avenue, London EC3M 5BN Time: 11am – 3pm 1:1 Appointments: 1pm – 3pm (by request) For more information or to register please contact Ruth Thompson: t: +44 (0)20 7036 8070 e: Italian update – ANIA agrees with FiscalReps’ IPT rate table Last month FiscalReps met with ANIA, the industry trade body, and the Italian tax authorities to discuss IPT compliance and, in particular, IPT rates. There is a raft of dated and interrelated legislation that does not always provide the insurer or broker with an explicit IPT rate. As tax officials have in the past been reluctant to offer input on specific tax treatments, ANIA has taken the lead on behalf of the industry to determine the most appropriate tax treatments, and consequently setting the benchmark in terms of market practice. FiscalReps has drafted a rate table for each of the 70+ premium taxes in Europe and is looking to obtain signoff with the relevant tax authority. ANIA agreed with FRL’s IPT rate table and, in turn, our understanding and interpretation of the relevant legislation. This is good news for our clients who wish to be compliant and avoid potential penalty and interest charges. Our next step is to present our IPT rate table to the Italian tax authorities for their agreement. We will keep you informed on any developments.

Hungary – update on filing of IPT returns As you are probably aware, all insurance companies with a license to write insurance into Hungary are required to file an IPT return on a monthly basis. On 4 June 2013 the Hungarian National Tax and Customs Administration (NTCA) confirmed that this requirement falls on both domestic and FOS insurers and is also extended to branches and subsidiaries. In practice it means that each branch/subsidiary of the insurance company should file a separate IPT return. NTCA also confirmed that a consolidated IPT return filed on behalf of FOS branches and subsidiaries is not allowed. In addition to the above, on 3 May 2013 the NTCA confirmed that nil declarations are required, although the IPT legislation is not explicit on the requirement to file ‘nil’ returns in months when no IPT is payable. Therefore it seems that any insurer licensed in Hungary but not currently active is still required to file a ‘nil’ IPT return in Hungary. To comply with this requirement the insurance company is free to choose whether to file a monthly nil IPT return in the usual way or to submit a monthly statement (so called “nyilatkozat”) confirming nil IPT liabilities for the respective month. The latter should be submitted in the same way as the IPT return and thus electronically to the NTCA Authority. USA – Connecticut tax amnesty proposed A bill is currently before the Connecticut General Assembly for the introduction of a tax amnesty program for individuals, business and other taxpayers that owe Connecticut state taxes. The Amnesty runs from 16 September 2013 to 15 November 2013 and covers any taxable period ending on or before 30 November 2012. If a taxpayer pays the taxes due by 15 November 2013 the bill provides for a 75% reduction in interest rate (i.e. from the current

annual rate of 12% to 3%) on those taxes owed to the Department of Revenue Services. However, the bill imposes a non-waivable penalty of 25% of the tax owed on any taxpayer who owes tax for a period ending on or before 30 November 2013, that has not filed an otherwise required return and does not file for amnesty with respect to that period. The amnesty will apply to all Connecticut taxes other than the Motor Carrier Road Tax and thus should apply to Connecticut Insurance Premium Tax and SelfProcured Tax. Croatia update FiscalReps is currently in dialogue with the Croatian tax authorities about the critical points relating to premium taxes, namely the registration process, the filing and settlement process, whether or not a fiscal representative is required and the correct premium tax rates based on class of business written. FiscalReps travelled to Zagreb in April this year to obtain a better understanding of the local premium taxes. With the assistance of the Croatian Insurance Bureau, we understand that FoS insurers may be liable to a number of Croatian premium taxes with effect from 1 July 2013, the date Croatia joins the EU. The basis for our understanding is Articles 4 & 6 of the Insurance Act. However, in a conversation with the Croatian Ministry of Finance last week, it was verbally confirmed that new legislation shall be introduced very shortly relating to premium taxes and Croatia’s accession. In the absence of other information, FiscalReps will await the outcome of these discussions and inform our clients immediately on any developments.

What’s new – VAT EU – Can the sale of shares be a TOGC? In Case C-651/11 X BV, the European Court of Justice (ECJ) has ruled that a transfer of a 30% shareholding, even together with the transfers of the rest of the shares from other shareholders to the same buyer, did not qualify as a transfer of business as a going concern (TOGC). The ECJ did state that the transfer of 100% of a shareholding may qualify as a TOGC, which is in line with an earlier case SKF (2009) Case C-29/08. Another case on 100% facts may be necessary before TOGC treatment can be definitely established and the dividing line drawn, but the ECJ does say that the transfer of a passive 100% shareholding would not qualify – in other words the dividing line may be that there must be management or other services provided by both the transferor and the transferee. However, in X BV there was a management activity carried out – the problem was that it is not clear from the reference whether this continued after the transfer of the 30% shareholding. This ruling has implications for deductibility of input tax on associated costs, but the question of attribution was referred back to the Dutch court.

allowed, and Member States need to apply another allocation key if it gives a more accurate result. Luxembourg has said that businesses must now apply an alternative method if it gives a more accurate result. In the UK, alternative (special) methods are dealt with by administrative efforts using powers granted to HMRC in the VAT Act 1994. Therefore it is not expected that changes will be required. Other Member States, however, may need to implement a similar change as in Luxembourg. We also await the Judgment of the ECJ in Le Credit Lyonnais Case C-388/11, which concerns the inclusion of foreign turnover in the pro rata calculation. The Advocate General has said there is no reason for a Member State’s law to insist on inclusion or exclusion, and if the Judgment follows this it will probably be necessary to justify inclusion or exclusion on the basis of the accuracy of the result following Baumarkt. Slovenia – Increase in VAT rate Slovenia has announced an increase in VAT rates to take effect from 1 July 2013. The standard rate of VAT will rise from 20% to 22% and the reduced rate from 8.5% to 9.5%. Montenegro – Increase in VAT rate

EU – Claims for input tax by nonEU business The deadline is 30 June 2013 for a non-EU business to submit a claim to an EU country for VAT incurred there in 2012. The claim is made on a special form and submitted with original invoices, under the Thirteenth Directive 86/560/EEC. Assistance is available from FiscalReps. Luxembourg – Partial exemption methods A Circular has been published following the case of Baumarkt C-511/10 in the ECJ. The ECJ found that a slavish reliance on the turnover-based pro rata as a partial exemption calculation to give a recovery percentage was not

Montenegro has also announced a 2% increase in its standard VAT rate to take effect from 1 July 2013. The standard rate of VAT will rise from 17% to 19%. China - VAT pilot to be implemented nationwide With effect from 1 August 2013, China’s provincial VAT Pilots will be consolidated into a nationwide pilot with common rules. Amongst other changes and clarifications arising from feedback on the various pilots, a new Circular (37) stipulates that zero rating will take precedence over exemption.

VAT TRAINING COURSES! Multiple booking discounts: 2nd PLACE HALF PRICE & 3rd PLACE FREE! 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

Secure email encryption service is now available for clients FiscalReps has implemented true email encryption through the use of Transport Layer Security (TLS). TLS uses a Public-Key Infrastructure to encrypt messages from mail server to mail server and uses digital certificates to authenticate received emails enabling clients to securely communicate with all FiscalReps employees. Further information on any of these issues may be obtained from Peter Hewitt or Nick Hammond t: +44 (0)20 7036 8070 e: /

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, Frankfurt, 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:

2 1

7 4








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


12th September Madrid, Spain - IPT European Forum


27th September Milan, Italy - IPT European Forum


14th October Paris, France - IPT European Forum

Head office: 10 Fenchurch Avenue | London | EC3M 5BN | UK FiscalReps Registered office: 200 Fowler Avenue | Farnborough Business Park | Farnborough | Hampshire | UK FiscalReps is a trading name of Fiscal Reps Limited | Registered in England and Wales (company number 4994134) FiscalReps®, taxbox® and taxDNA® are all registered trademarks owned by Fiscal Reps Limited


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