Changes to the reporting of insurance-based taxes in France are due to take effect from 1 January 2016. Our expert has a detailed look at the implications.
The French Insurance Premium Tax (IPT) regime is known as one of the most complicated to negotiate in Europe. Non-life insurers have to contend with different rates dependent on the type of insurance business written, compulsory reinsurance on certain contracts (with further IPT considerations), per-contract fund contributions, taxes on both insurer and insured, annual reporting and multiple tax returns, all provided for in nuanced and complex legislation. On top of this, they have just 15 days following the end of the reporting month in which to prepare and submit the main IPT return and pay their tax liability, which can be quite a challenge for a large insurer with multi-jurisdictional tax liabilities.
Perhaps with the current complexity in mind, the way Motor and Health insurance is reported is being changed in France. They are reported in distinctly different ways; accordingly we should address them separately.
The majority of motor contracts in France are currently subject to IPT, plus CATNAT IPT and the associated insurer contribution on the CATNAT premium. Different rates, contributions and rules can apply for agricultural and commercial land vehicles. Contracts with damage cover also attract the 3.30 per contract 'Victims of Terrorism' contribution. Motor liability contracts, or the liability element of comprehensive motor contracts, are also subject to a Social Security Contribution of 15% (minus administrative discount of 0.8%), as well as additional contributions to the Fonds de Garantie of 1.2% and 0.8%.
Under new measures to be introduced on 1 January 2016, there will no longer be a social security contribution due on motor liability business. There will instead be two new rates of motor IPT, as follows:
15% for compulsory motor liability insurance of agricultural land vehicles and commercial land vehicles exceeding 3.5 tonnes in weight 33% for compulsory motor liability insurance. The existing IPT rates for non-compulsory motor insurance and motor legal protection will be unaffected by these changes. The rates of the additional contributions for agricultural vehicles and the contributions to the Fonds de Garantie are not currently due to change at this time, though there could still be further changes announced ahead of next year.