As an intermediary, you are often the party liable for insurance premium tax (IPT) in the Netherlands, certainly if you are a designated intermediary/broker or authorized agent. That’s why you should look closely at the following matters:
Party liable for IPT (taxpayer)
Dutch IPT is, in terms of the determining the party liable for IPT, far more complex than other countries. It is sometimes the case in practice that a party other than the intermediary pays the IPT, for example the insurer. However, if you, as intermediary, are formally liable for the IPT, the Dutch tax authorities may still impose an IPT assessment on you. Our advice to intermediaries therefore is to carefully check on a case-by-case basis if they are liable to pay the IPT due to the tax authorities.
The liability to pay IPT can arise both in case of premium as well as a fee. For example, if you mediate in insurance policies and are paid a fee for this by a party other than the insurer established in the Netherlands, you may have to pay IPT on that fee.
Place of risk and allocation
In order to determine in which countries IPT is due, you need to establish in which countries the IPT risk is located and what part of the premium/fee must be allocated to that risk. This can be the case for worldwide coverage and group coverage, but also for Construction All Risk (CAR) coverage and countless other types of insurance policies.
Establishing the place of risk and allocation is something that must be done with due care. For example, the insurance of goods that are located multiple countries can be fully taxed in the Netherlands. Double (non-)taxation may thus arise in practice. If you, as intermediary, are liable for IPT, then it is certainly worthwhile paying extra attention to the place of risk for IPT.
Exemptions and allocation
Exemptions apply in the Netherlands, inter alia for reinsurance, the insurance of seagoing vessels, transport insurance, and certain income and care-related insurance policies. It is possible for an insurance policy to have both exempt and taxed insurance elements, such as transport and storage coverage. What needs to be established in that case is whether and to what extent IPT is due.
If you, as intermediary, are liable for IPT, then it’s essential that you pay extra attention to exemptions and allocation to taxed risks. In practice, allocation issues can lead to disputes with the Dutch tax authorities, despite that fact that there is currently no allocation method prescribed by law or in the New Dutch Policy Statement on Insurance Premium Tax (published on May 12, 2022).
Intermediaries are also confronted with a multitude of other matters, including the overlap with VAT (advice versus mediation) and (reverse charge) VAT on the handling of claims and loss adjustment.
Would you like to know more about insurance premium tax?
KPMG Meijburg & Co’s team of specialists would be pleased to help you. We have expertise at both the national and international level. Moreover, we are part of the worldwide KPMG network. We are therefore well-placed to help you analyze your IPT position. We look forward to meeting you.