Challenges for multinationals
Our specialists would be pleased to help you with any insurance premium tax issues (IPT) you may have. IPT has become of increasing importance for multinationals, although this is often overlooked. If a multinational has its own captive insurer in the group, it will usually be aware of insurance premium tax. This is explained in more detail on our webpage on insurers. Even without a captive insurer in the group, insurance premium tax can still be relevant.
IPT or VAT?
We see it is becoming a trend for multinationals to sell guarantees or insurances, in addition to the regular supplies. The question that then arises is: is IPT or VAT due?
IPT and VAT are often compared as they are both indirect taxes. Moreover, they both have a 21% tax rate. However, there are several important aspects on which they differ. For example, companies cannot reclaim IPT, but can usually reclaim VAT.
And with regard to VAT, all types of agreements have been made between countries with a view to harmonizing legislation. In contrast, IPT has barely been harmonized at the international level. This means that the scope, the calculation method and the tax rates can differ significantly per country. There are even major differences within the EU.
Insurance or another type of product?
Besides the more traditional insurance policies, there are various other products, such as extended guarantees or service and maintenance contracts, which gives rise to the question whether IPT is due. There is often a lot at stake here. For example, in disputes the Dutch tax authorities may sometimes argue that certain elements of the price may be subject to both VAT and IPT. However, it could also be the case that neither are due.
The multinational as taxpayer
What multinationals are not always aware of is that the Dutch tax authorities may hold them responsible for IPT. This is something we see crop up every now and then in practice, and then not only with regard to insurance policies that multinationals take out for their own coverage, but also where a multinational offers insurance policies for its own products or brokers therein. In the Netherlands, multiple parties can be liable for IPT.
The multinational as policyholder
One aspect of IPT that is often neglected is the cost it constitutes for businesses. We regularly see that multinationals unintentionally pay too much IPT. This is usually the result of the tax being remitted twice (double remittance).
In addition, multinationals may be confronted with an excessive allocation to countries where a high IPT rate applies. At the same time, multinationals may in some cases fail to meet the compliance obligations applying if they are responsible for remitting the IPT themselves.
We organized a webcast about this for the professional association NARIM. You can view it here.
Tax advice on insurance premium tax
Would you like to know more about IPT? Our 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.