The law changes effective in 2013 also trigger filing and payment obligations for the policyholder (e.g., the U.S. parent company) for German insurance premium tax purposes.
Under Germany’s prior insurance premium tax (IPT) law, premiums for insurance policies—
- that covered risks of German subsidiaries, permanent establishments or any other facilities in Germany, and
- that were concluded by a U.S. parent company or any other group company outside of the EU/EEA with an insurer that is not domiciled in the EU/EEA
were only subject to German IPT if physical items located in Germany were insured.
New law includes all insured risks
Effective 1 January 2013, the scope of the German IPT law was broadened and now includes all insured risks of German subsidiaries, permanent establishments or other facilities in Germany.
For example, directors and officers (D&O) insurance of a U.S. multinational corporation covering the D&O risks of directors of German subsidiaries and business liability insurance covering German operations are now included in the scope of the German IPT law.
Who must remit the tax?
The rate of the German IPT generally is 19% and is based on the amount of the insurance premium.
Although in general, the insurance company is the party that must remit the German IPT payment to the German tax authorities on behalf of the policyholder, the new law shifts that burden to the foreign policyholder in certain situations.
For example, if a company (e.g., a U.S. parent company) enters into an insurance contract for the entire group, including its German operations, with an insurance company outside of the EU/EEA that does not have a representative or branch in the EU/EEA, the policyholder—and not the insurer—must file the German IPT returns and must remit the amount of the German IPT.
Depending on the amount of total IPT due, German IPT returns must be filed on a monthly or quarterly basis, and are due by the 15th day following the respective month- or quarter-end.
In situations when insurance policies are concluded with an insurer that is domiciled in the EU/EEA, the insurer remains liable for paying the German IPT on behalf of the policyholder.
For more information, contact a tax professional with KPMG’s German Tax Center in the United States or the KPMG member firm in Germany:
+49 89 9282-1382
+49 221 2073-1490