In a case involving Dutch insurer RVS Levensverzekeringen NV, the Court of Justice of the European Union ruled earlier this year that the insurance premium tax to be paid should be determined by where the insured person is located when the premiums are paid rather than where they lived when the contract was first concluded. This means that insurers will have to establish and monitor the location of the policyholder during the life of the policy, and will have to find ways to gather current location data for the policyholder.
In an opinion piece, Darren Mellor-Clark, indirect tax expert at Pinsent Masons slammed the decision, saying it would have the opposite affect to the purported intention of the CJEU. "The CJEU said that this makes competition more effective in the EU because it takes tax out of the equation as a competitive factor in their choice of insurer - they can choose a domestic or foreign insurer and know that the same premium tax will be due regardless of which they choose", he said.
"In fact, though, it is likely to undermine the European Union's single market policy because it will make it more difficult and more expensive for insurers to offer cross-border insurance services." "The decision will hamper insurers' attempts to serve non-domestic markets and adds unnecessary costs to their operations at an already difficult time", he added.
In its ruling, the CJEU said that the 'habitual residence' of the insured people, which is the legal test of location for life assurance commitments established by EU Directives, could change, and that the tax was due on the basis of their place of residence at the time that the premium was due, not locked at the country of residence at the time of the contract conclusion.
Full article
© Incisive Media Investments Limited
Key
Hover over the blue highlighted
text to view the acronym meaning
Hover
over these icons for more information
Comments:
No Comments for this Article