Given the size of the property portfolio and premiums, the insurance premium tax (IPT) due was considerable and any tax errors were likely to be material to the captive’s financial performance. This was just one captive that was managed by an international firm of captive managers, with many other captives within their portfolio encountering the same challenges.
IPT regulations across the European Union are complex but for the captive owner and its chosen captive manager it was essential to be able to identify the full cost of insurance, including premium taxes, in an ever-changing corporate environment.
Furthermore, compliance failures can be costly as in many countries penalties and fines are punitive when mistakes in tax calculations are made. Many tax authorities are viewing IPT as a source of revenue growth and are taking much greater interest in the tax compliance affairs of their captive insurer taxpayers.
Insurers writing business within the European Union have the primary responsibility for IPT compliance.
The captive manager and captive board decided to engage with FiscalReps to outsource all of its IPT compliance obligations within the European Union. FiscalReps worked closely with the captive managers to calculate and settle premium taxes on a timely basis, ensuring that the captive owner and its captive remains in full compliance with all EU premium tax compliance obligations.
By using FiscalReps, the captive owner and the captive manager quickly obtained a professional level knowledge of all European Union IPT rates and was immediately able to calculate IPT due on premiums written accurately and consistently, ensuring that no compliance failures were suffered. The captive manager was able to save time and ensure compliance by using a consistent approach to calculate taxes quickly across all of its captives under management.