Belgian authorities clarify scope of insurance premium tax and VAT for insurance-related services

Following a change in the law last December, the Belgian tax authorities last week issued a Circular letter (nr. 2024/C/43) with guidance on previously unanswered questions and to clarify the scope of VAT and insurance premium tax for insurance-related services. The grace period for filing IPT returns and paying the tax expires in four months.

Pursuant to a Law of 28 December 2023, Belgian IPT also applies to the consideration for insurance related-services when they benefit from the VAT exemption for insurance and reinsurance transactions (including services of brokers and agents with respect to such transactions but excluding loss adjustment). The Belgian tax authorities have now clarified some questions raised by the change in the law:

• Regarding the concepts of broker and agent and the scope of the VAT exemption, the Circular refers to existing VAT guidance.
• The consideration for services related to insurance is subject to IPT when it’s related to an insurance transaction which is itself taxable (cf. location of the risk and available exemptions).
• The applicable IPT rate is the same as that of the insurance transaction to which the services relate. For global policies covering multiple risks or insurance types, the tax authorities will generally accept a proportional allocation of the consideration in line with that of the premiums. 
• The IPT with respect to the service fee is in principle due by the insurance intermediary, but it can explicitly opt to pay the tax to the relevant insurance company. In this case, the obligation to file an IPT return and pay the tax to the authorities is transferred to the insurance company.

Finally, a specific grace period IPT return is available on the tax authorities’ website (link in Dutch/French).

Key takeaway

The amended legal provisions entered into effect on 8 January 2024. But, given the time necessary to properly implement system changes, the IPT returns for January to August 2024 need to be filed, and the related tax paid, by 20 October 2024. Affected insurance intermediaries and insurers should press ahead with implementation, taking into account the guidance provided by the Circular, to comply by the end of the leniency period.