The Insurance Premiums Tax Act (IPTA) entered into force on 01.01.2011 – promulgated in the State Gazette issue 86 of 02.11.2010. This act introduced a new type of tax – tax on the insurance premiums based on taxable insurance contracts where the risks are covered by the insurance companies. The rate of the insurance premiums tax is 2 %.
Guidelines regarding the application of the Insurance Premiums Tax Act
Taxable persons shall be:
- Insurance companies registered as joint-stock companies, cooperatives, as well as insurance companies from a third country operating via a branch – all these entities being registered pursuant to the Commercial Act and licensed under the order and procedure of the Insurance Code.
- Insurance companies from other member states subject to the right of establishment or to the freedom to provide services.
- Tax agents appointed by insurance companies and operating subject to the freedom to provide services, who represent these companies with regard to fulfilling the lawful liabilities.
Exempt from taxation shall be the insurance premiums under reinsurance and retrocession contracts, life insurance and rent, marriage and children’s insurance, life insurance related to investment fund, permanent health insurance, capital buyout, additional insurance, cargo during international transportation, aircrafts and vessels insurance, as well as the civil liability related to the ownership and usage of aircrafts and vessels, and insurance of cargo during international transportation.
The tax event shall be the receipt of the insurance premium by an insurance company under a concluded insurance contract subject to taxation; in case of rescheduled payment of the insurance premium the receipt of each part of the premium shall be considered a single tax event. The tax event occurs on the date when the insurance company receives the insurance premium.
The tax base shall be the insurance premium received by the insurance company under an insurance contract subject to taxation.
In case of rescheduled payment of the insurance premium the tax base shall be the part of the insurance premium received by the insurance company.
The tax due to be paid by the insurance companies for the tax period shall be the difference between the total amount of the tax due by the insurance company for the tax period, and the total amount of the tax on the insurance premiums returned during this period.
The total amount of the tax on the insurance premiums returned during the tax period shall be calculated by multiplying the amount of the already levied insurance premiums returned during this period by 2%.
The tax due for the tax period shall be paid monthly by the insurance companies by the end of the following month to the state budget to the account of NRA’s Territorial Directorate where the companies are registered.
The tax return for the previous calendar quarter shall be submitted by the insurance companies by the end of the month following the quarter.
The tax agents and the insurance companies from another Member State subject to the right of establishment or to the freedom to provide services must also submit only once, by the end of the following month, a tax return as per template for the first tax period for which tax is due.
