Belgian tax authorities get clearer powers to collect insurance premium tax for Belgian risks covered by global policies

As of 8 June 2024, the Belgian Code of Miscellaneous Duties and Taxes will explicitly provide that as an ultimate default (when no insurance company, tax representative or insurance intermediary can be identified as debtor of the tax), liability for paying insurance premium tax will rest with the Belgian establishment to which the policy relates. That is if the policyholder is a legal person. Where the policyholder is a natural person, as previously, the policy holder will be liable for paying the insurance premium tax in the same circumstances.

If a foreign insurer has no tax representative in Belgium or if the insurance premium tax hasn’t been paid, the Belgian establishment to which the policy relates (where the policyholder is a legal person) or the policyholder (in other cases) will be liable to declare and pay the tax within three months from when the premium lapses.

A Belgian establishment basically means either a branch or a subsidiary.

These legal changes enshrine the interpretation that was previously applied by the Belgian tax authorities without a clear legal basis.

The Belgian tax authorities are expected to further intensify their attempts to recover insurance premium tax from Belgian group companies insured by a foreign insurer under a global policy (with a foreign group company as the policyholder). The intra-group recharge borne by the Belgian group company for the coverage will then often be equated to the premium for calculating the tax due. But, depending on the type of risk covered, the apportionment of the overall premium might prove more complex and give rise to discussions.

To ensure compliance and avoid penalties, potentially affected Belgian-resident companies and Belgian branches of foreign companies should assess their position. And, if applicable, they should ensure arrangements are in place so appropriate tax filings and payments are made on their behalf going forward. As for EEA insurance companies doing direct business in Belgium without a local presence, they may want to reconsider the merits of appointing a tax representative, to avoid incurring any competitive disadvantage (note non-EEA insurance companies already have a legal obligation in this respect).

Our tax team is of course available to provide any advice you may need regarding these changes.