IPT : proposed changes regarding insurance-related services
27 Oct 2023
On 19 October 2023, the Belgian government proposed amendments to the Belgian Insurance Premium Tax (“IPT”) framework. The proposal seeks to redefine the taxable base and the parties liable for the tax where intermediaries provide certain insurance-related services that are not subject to VAT.
Currently the IPT is due on the amount of "premiums" and "charges" to be paid or borne during the tax year by the policyholder. The term “charges” includes a.o. the brokerage commission paid to the broker or other intermediary.
In this regard, the explanatory notes to the proposal state that nowadays intermediaries are no longer solely remunerated through insurance commissions (paid by the insurance undertakings). They may also receive fees – from policyholders – based on a separate management contract entered into with the latter. According to the government, intermediaries often argue, in practice, that these management services are not subject to the IPT but to the VAT regime, under which an exemption would apply (art. 44, § 3, 4° VAT Code). The explanatory notes nevertheless remind that the VAT exemption is limited to:
the intermediaries’ own involvement in the conclusion of an insurance contract; and
insurance-related management services (provided by intermediaries) insofar as those services relate to insurance contracts concluded or amended as a result of the intermediaries’ involvement.
In other cases, intermediaries’ services are subject to VAT.
In order to prevent the situation where insurance-related services would escape both the application of the IPT and VAT, the government proposed to replace the concept of "charges" in the IPT legislation by that of "remuneration for insurance-related services where they are exempt from VAT pursuant to art. 44, § 3, 4° VAT Code". As a result, the scope of the IPT and the VAT would be harmonised and mutually exclusive.
The IPT rate applicable to the "remuneration for insurance-related services" would be the same as that applicable to the insurance operations to which these services relate.
In the current proposal, Belgian-resident intermediaries would be liable to pay and declare the tax in respect of separate insurance-related contracts they entered into directly with policyholders. This is logical as insurance companies are in principle unaware of the existence of such agreements.
By way of derogation, a Belgian intermediary could opt to pay the IPT on insurance-related services to the Belgian insurance undertaking. The latter would then assume declaration and payment responsibilities towards the Belgian treasury.
The legislative proposal does not impose a similar filing and payment obligation on non-resident intermediaries. The person liable to pay the IPT on insurance-related services provided by foreign intermediaries should then be the Belgian policyholder.
The proposed changes are of significant importance for insurance intermediaries operating in Belgium, requiring them to re-evaluate their current contracts, pricing models, and compliance frameworks.
The proposal is still under review, and it remains to be seen what the final legislative text will include.
For an analysis tailored to your specific needs, or if you have any questions about how these changes may affect your operations, please do not hesitate to contact us.
