FiscalReps Newsletter December 2013 15th edition
What’s new – Premium Taxes We shall have to wait and see what IPT changes materialise in the New Year, but here are a few of our predictions: Czech Republic Presentation of the long awaited IPT Bill to Parliament for approval and possible implementation in 2015. France As promised in President Hollande’s 2012 election manifesto, a reduction in the rate of IPT paid to the Solidarity Sickness Fund. Ireland With on-line filing available/mandatory for most other taxes, 2014 may see the introduction of on-line filing for insurance levies, so avoiding the need for the current hand-written forms. Greece With the recent introduction of online filing for IPT and Pension Fund contribution, the relative ease with which the Tax Authorities can now analyse returns and payments has already resulted in an increase in queries. 2014 may see the Tax Authorities devoting greater resources to IPT audits. UK Drafting of regulations for the introduction of a ‘flood levy’ on property insurances with possible implementation of the tax in 2015.
Germany – new invoicing rules from 1 January 2014 In case you have missed previous alerts and newsletters, 1 January 2014 will see important changes to invoicing requirements in Germany. For all premiums due after 31 December 2013 it is a mandatory requirement for the premium invoice to include the IPT amount, the IPT rate, and the insurer’s German Tax ID. If insurance premiums are exempt from the tax, the tax exemption must be stated. In the absence of an invoice, the tax amounts must be shown in another document which created the insurance relationship. Italy – Some Good News from IVASS On 31 October 2013 the Italian insurance regulator, IVASS (formerly ISVAP), announced an increase in the “management fee” that it allows insurers to retain when accounting for the parafiscal contributions payable for the Road Accidents Victims Fund and Hunting Fund. For insurance premiums received on or after 1 January 2014 the management fee will increase from the current rate of 4.1% of premium to 5.1% of premium. This means, in effect, that the contributions payable in 2014 (on motor third party liability insurance in the case of RAVF and general liability insurance in the case of
the Hunting Fund) should be calculated on a tax base of 94.9% of the taxable premium instead of the current tax base of 95.9% of premium. If you have any questions concerning this article please contact Susie Crew, Client Director on t: +44(0)20 7036 8070 or e: email@example.com San Marino IPT The Republic of San Marino has adopted IPT Legislation effective 1st December 2013. From this date a new 4% premium tax will apply. There are exemptions for life and reinsurance. The San Marino Tax Office has still to confirm the requirements for registration, returns and payments and we understand it will advise on such matters before the end of March 2014 Denmark – SKAT information requests We have received several letters from the Danish tax authority SKAT asking why a particular insurer is not registered for IPT, pleasure boat or motor liability tax. SKAT appears to have compared the premium tax register with the list of FOS licensed insurers published by the Danish FSA. In most cases we have seen so far, the insurer is in fact already registered, and the problem seems to be that the name on the register is slightly different from the name on the licence.
FiscalReps’ Annual Indirect Tax Forum: Setting the Pace Thank you to all that attended FiscalReps’ Annual Indirect Tax Forum at Trinity House, London on 27 November 2013. Information from the day, including presentations and podcasts from the breakout sessions, can be found on the FiscalReps website at www.fiscalreps.com
What’s new – VAT
EU – Management of DC Pension Funds Exempt?
EU – Confirmation that the Contract Price Includes VAT
The Court of Justice of the European Union (ECJ) has issued an Advocate General’s Opinion in ATP Pension Service A/S Case (C-464/12). The Advocate General considers that the management of a Defined Contribution (DC) pension fund is eligible for exemption. An Opinion is only a preliminary step in the judgment process, but the Court itself usually follows the reasoning and therefore reaches the same conclusion.
The ECJ has ruled in the joined Romanian Cases C-249/12 CorinaHrisi Tulică and C-250/12 Călin Ion Plavoşin on the vexed question of whether the contract amount is to be treated as VAT inclusive or VAT exclusive where it is found after the contract is made that VAT is due. The answer is that it is VAT inclusive in circumstances where the VAT cannot be charged in addition to the contract amount (by agreement between the parties, for example, when it is recoverable by the purchaser). This is wholly consistent with the current UK treatment but will necessitate law and/or policy changes in some other EU countries.
This contrasts with the judgment of the ECJ in PPG Holdings Case C-26/12 which decided that management of a defined benefit (“DB”) scheme does not qualify for exemption. The reason is that whilst the DC scheme can be classified as a “special investment fund” within the meaning of Article 135(1)(g) of the Principal VAT Directive, the DB scheme cannot. There is logic in this distinction as a DC scheme is much more similar to a collective investment arrangement as set out in the UCITS Directives 2001/107/ EC and 2001/108/EC, which are often referred to in the context of the VAT exemption. The most important distinguishing factor is that the beneficiary is taking the investment risk in a DC scheme, whereas in a DB scheme it is the employer who takes the risk. The Advocate General did not see it as relevant whether the investments themselves are made by the employee or by the employer on behalf of the employee. There is one note of caution. The Court reversed the Opinion of the (different) Advocate General in the PPG case, so it is still possible it may do the same this time. The ECJ judgment is expected in the first half of 2014.
France – VAT Rate Increases from 1 January 2014 The French VAT standard rate increase proposed for 1 January 2014 has been confirmed. The standard rate will rise from 19.6% to 20%. The 7% rate will be abolished, with restaurant food and hotel accommodation moving to the 10% rate. The planned reduction in the 5.5% rate to 5% will not now take place. Ghana – VAT Rate Increase Ghana has announced that the current VAT rate of 12.5% will rise to 15% with effect from 1 January 2014. Further information on any of these issues may be obtained from Peter Hewitt or Nick Hammond
USA – FATCA The Foreign Account Tax Compliance Act (FATCA) represents an effort by the US Treasury Department to prevent US taxpayers, who hold financial assets in non-US financial institutions, from avoiding their US tax obligations. FATCA became law in March 2010 with Regulations issued in January 2013. Although a slight delay in original timeframes, with effect from 1 July 2014 onwards any institution in scope and unable to evidence its FATCA status will be subject to a 30% withholding tax and notification to the IRS by its US withholding agent. The vast majority of non-life insurers are unlikely to qualify as a Foreign Financial Institution (FFI) as FATCA intent is primarily driven to identify insurance arrangements that have investment linked product attributes. However, there is a significant responsibility on the part of the US withholding agent (a broker) that could possibly increase the demand for US tax related documentation, such as: W series forms, tax residency certificates and official legal or regulatory incorporation evidence. FATCA should not become an additional process in an organisation rather an addition to existing compliance practices, such as: know your clients and anti-money laundering. For further information on FATCA please contact Stuart King e: firstname.lastname@example.org
t: +44 (0)20 7036 8070 e: email@example.com / firstname.lastname@example.org
Or your usual FiscalReps contact.
Wishing you a Merry Christmas and a Very Prosperous New Year! From all at FiscalReps
This year FiscalReps will be open for business on the following days of the Christmas and New Year Holiday period: 23 December 2013 24 December 2013 25 December 2013 26 December 2013 27 December 2013 30 December 2013 31 December 2013 1 January 2014 2 January 2014 3 January 2014
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