1 November 2012
It has come to our attention that four Spanish provinces, Navarra, Álava, Guipúzcoa and Vizcaya (the last three form part of the Basque region) will require insurers, that write both domestic and Freedom of Service business, to file a specific provincial IPT return and settle the relevant IPT directly to the province’s tax department rather than the national authorities in Madrid.
The provision in Spanish law 12/1981, de 13 de Mayo, that gives these Autonomous Communities the right to collect their own taxes, including IPT (article 31) but excluding Consorcio charges, has been in place since 1981. However, it is only now that the provinces have decided to exercise these powers, mainly in response to the ailing economic situation in Spain.
The Location of Risk rules for the provinces appear to be in accordance with Article 2 (d) of EU Second Non-Life Directive rules. IPT should be apportioned accordingly.
It is possible that other regions in Spain, such as Barcelona, will see this as an opportunity to demand such powers, though the current legislation only covers the four provinces mentioned above.
Fiscal Reps is in dialogue with the relevant Tax Authorities and has agreed a process to ensure that insurers comply with the IPT filling and settlement obligations in these provinces.
If you have any questions regarding this alert, please contact Nick Hammond t: +44 (0)20 7036 8070 | e: