The IPT rate on Legal Expenses insurance is expected to increase from 11.6% to 12.5% with effect from 1 January 2016. Further rate increase is anticipated from 12.5% to 13.4% on 1 January 2017. The announcement was made during the 2016 Budget presentation (Projet de Loi de Finances pour 2016). These two rate increases are currently being discussed at the Assemblée Nationale, the lower house of the French Parliament, and should be adopted by the end of this year. FiscalReps understands that the above mentioned rates are not definitive and may be changed during the final approval that is expected in December.
Following the last year’s rate increase, the French government is looking to collect additional revenue on legal expenses insurance contracts in order to fund the activities provided under French Legal Aid Programme. The aim is to collect additional €10m in 2016 and €20m per annum from 2017 onwards.
On the same basis, the IPT rate increase should apply to the same insurance contracts (non-life insurance class 17) that have been subject to the previous increase from 9% to 11.6% effective from 1 January 2015. Thus certain specific legal expenses insurance contracts should fall outside the scope of the increase.