Subject to amendment
1Appendix II
High-level Overview of the Taxation of Unit-linked Life Insurance Policies issued to Natural Persons by EU Life
Insurance Undertakings operating on a Freedom of Services Basis in certain Member States of the European Union
11 This table addresses the notification and withholding obligations in relation to life insurance business applicable to EU life insurance
undertakings operating on a freedom of services (“FOS”) basis in a number of EU Member States. The Member States in question are the principal States in which many AILO members operate. EU life insurance undertakings operating on a branch basis in a Member State are generally subject to the same notification and withholding tax obligations as local domestic insurers and have not been included in this table. Country Requirement for insurer to appoint a fiscal representat-ive or to make direct disclosures to Tax Authority Requirement to report premium receipts/policy issuance Require-ment to report annual value Requirement to report final events (withdrawals/surr enders/ death)
Tax Point Is there a requiremen t for interest - bearing instruments to be separately identified in the policy? Type of tax on emerging benefits, including interest and other forms of income growth Tax relief available for specific qualifying policies Inheritance/ Gift tax due on benefits
Austria Yes Yes. Premium tax is due on each premium received. Monthly report send to authorities with payment
No No Premium tax on
commencement No None Yes Yes
Belgium Yes Yes. Premium tax is due on each premium received.
No No Premium tax on
commencement No None Yes Yes
Subject to amendment
2 Monthly report sendto authorities with payment
Cyprus Yes Yes No No Stamp Duty on
commencement No None Yes No
France Yes Yes. Filing of quarterly report. Submission of withholding tax returns and payment of tax liability Annual wealth tax Certificates issued Yes. Quarterly report to tax rep detailing all new policies, surrenders, maturities and changes to exisiting policies Surrender/withd rawal Annual wealth tax
No Income tax Yes Yes
Germany Yes Yes – duty falls on agent 2
No No Surrender/withd
rawal
No Income Tax No Yes
Ireland No No No Yes Every 8 years
Surrender/withd rawal 3
No Special Flat Tax
Yes Yes
Italy Yes Yes. Monthly
reporting of
premiums received
No Yes Surrender/Withd
rawal No Special Flat Tax No No. An income tax liability is triggered on death of policyholder
Luxem-burg No No. An annual statement of premiums paid is issued to policyholder
No Yes Surrender/withd
rawal No Income Tax Yes Yes
Malta Yes Yes No Yes Stamp Duty on
commencement Surrender/withd rawal
No Special Flat
Tax No No
Subject to amendment
3 dsNorway No No Yes No Annual yield tax No None No Yes
Portugal Yes Yes. Bi-annual return and payment of parafiscal charges No Yes Parafiscal Charges on Premium Income tax on gains on surrender/withdr awal
No Income Tax No Yes
Spain Yes Yes Yes Yes Premium tax on
risk contracts Surrender/withd rawal for qualifying linked contracts Annually for non qualifying linked contracts Annual wealth tax No Special Flat Tax No Yes
Sweden No No Yes Yes Annual yield tax.
Statement of value issued to policyholder annually No None Yes No United
Kingdom Yes. Insurer can provide information direct to tax authority as alternative to appoint fiscal rep.
No No Yes Surrender/Withd rawal. Statement of gains on surrender or withdrawal issued to both policyholder and tax authority
Subject to amendment
42 German law permits the insurer to assume notification responsibility in place of the intermediary. 3 Unit linked policyholders are taxable on the growth within the policy every 8th policy anniversary.
Notes:
? AILO members hold source materials (legislation, regulations and tax circulars) to support the above overview; full details available on request.
? National reporting and withholding obligations should reflect certain fiscal and Single Market objectives, namely (i) FOS life insurance undertakings should be subject to the same or similar reporting and withholding obligations as domestic insurance undertakings in the host State in question, i.e. a “level tax playing field”; (ii) they must, therefore, be able to offer their products to host State policyholders with the same tax relief or benefits as those enjoyed by domestic products; and (iii) more generally, they must be able to exercise the Treaty-guaranteed freedom to provide services on terms which are non-discriminatory, proportionate to the fiscal objective sought by the host State and not unduly restrictive (cf. Commission’s Interpretative Communication on freedom to provide services and the general good in the insurance sector (OJEC, C43 of 16 February 2000, page 5);
? AILO members operating on a FOS basis accept host State tax requirements as “general good” binding on them as soon as they commence marketing of policies on the host State territory. Such tax requirements cover direct and indirect taxes payable on taking out of the policy, during its term, on surrender and at maturity/occurrence of the insured risk. They appoint local fiscal representatives to ensure full compliance with these requirements. Alternatively, where, for example by virtue of European Court judgements, a fiscal representative is not required (e.g. premium tax in Belgium), they ensure calculation, declaration and payment of tax directly from the home State. Another option is to appoint the insurance intermediary to fulfil the requirements (e.g. in Germany).
? Anti money laundering (“AML”) requirements set by EU legislation are also general good binding on AILO members. In certain jurisdictions, tax evasion can be an AML offence and so FOS insurance undertakings have due regard to the need to ensure that AML compliance extends, where necessary, to preventing tax evasion.
? Certain tax benefits, exemptions, etc. are conditional on factors such as qualifying periods, for example, in France the most favourable tax relief on surrenders is available after eight years; other States tax differently, for example in Ireland, policyholders are taxable on the growth within the policy every 8th policy anniversary;
? Reporting and withholding obligations may apply to taxes other than income tax, for example premium tax in Belgium. “Reporting” means providing information, in accordance with the requirements and options set out in the relevant national legislation, to the national tax authority directly, for example
Subject to amendment
5 withholding tax in France. Alternatively, the undertaking may provide information to policyholders in order to enable them to fulfil their tax reporting obligations, for example surrender values for policies for wealth tax purposes in France? AILO members may, as insurance undertakings carrying on an activity of insurance (as opposed to “first pillar” coverage and to institutions for occupational retirement provision), offer certain types of pension product (“tax-enhanced pension business”, “retirement benefits”, “superannuation schemes”, etc.): the above overview does not contemplate these products, since they tend to be dealt with separately under national tax laws.