Tax Alert: France - Increase of the Annual Insurers Contribution Maximum Rate to the Fonds de Garantie From 12% to 14%

The maximum rate of the annual contribution to the Fonds de Garantie des Assurances Obligatoires (FGAO) due by insurance companies writing compulsory Motor Third Party Liability (MTPL – Class of insurance 10) in France increased from 12% to 14% from 01 January 2019. This change means that the FGAO will be able to increase the rate of the contribution, currently at 12%, to a maximum of 14% as soon as an Arrêté Ministériel (Ministerial Order) changing the rate is published with prior validation from the Ministry of Finance.

The calculation of each insurer’s contribution is made in two steps:

  • The contribution rate is applied on the total amount of charges and expenses incurred by the FGAO during the previous calendar year
  • The contribution of each insurer is then calculated on a pro rata basis using the amount of premium covering Class 10 declared during the previous calendar year and applying a predefined rate

If you have any questions, please let your client team know.