Global

Details

  • Service: Tax, Global Indirect Tax, Global Compliance Management Services
  • Type: Regulatory update
  • Date: 8/21/2012

Denmark - New tax on insurance premiums 

August 21:   With passage of Danish tax legislation (L 172), the stamp tax on insurance policies is repealed, and is replaced by a new tax on insurance premiums, effective 1 January 2013.

The new insurance premiums tax is similar to other excise taxes, including the Danish tax on motor liability insurance and yacht insurance.


Under the new insurance premiums tax law:


  • The levy imposed with respect to insurance changes from a tax on insurance documents to a “regular tax” on insurance premiums.
  • The tax rate will be 1.1% of the amount of the insurance policy premiums.
  • The tax must be declared and paid by the 15th day of the month following the date of the tax period (months).
  • A “premium” is defined as the consideration paid for insurance coverage.
  • Statutorily required motor vehicle liability insurance is exempt from the new tax.
  • An existing tax exemption for insurance, when the insurance sum does not exceed DKK 12,000 (approximately U.S. $2,000), is repealed.
  • The rules requiring certain insurance companies to have a Danish registered representative are changed for insurance companies established in the EU, Norway, Iceland, Greenland, and the Faroe Islands.

A transition rule is provided for when a “large” amount of insurance premiums tax liability is not payable until after 1 January 2013 (the effective date). In such situations, the amount of the new insurance premiums tax is to be paid, rather than the stamp tax.


The new law also changes the current practice for calculating the tax on “combined insurance” (e.g., homeowners insurance that includes protection against fire and water damage). Under current stamp tax law, the amount of the stamp tax is calculated with respect to the insurance policy having the highest premiums rate. Under the new law, beginning 1 January 2013, the tax on premiums is calculated based on the total premium—i.e., on the premiums for all insurance policies included in the “combined insurance.”


Read an August 2012 report (Danish) prepared by the KPMG member firm in Denmark: Ny afgift på skadesforsikringer


Other indirect tax developments reported (in Danish) by the KPMG member firm in Denmark concern:


  • European Commission guidance regarding value added tax (VAT) treatment for vouchers and gift cards
  • A Danish tax authorities (SKAT) ruling that the sale of shares in connection with golf club memberships is not subject to VAT


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For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at:

+ 1 202 533 4366

1801 K Street NW
Washington, DC 20006.
 

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