New stamp duty measures for life insurance contracts

On 15 October, the Italian government has finally approved the bill of the 2025 Budget Law including article 11, which introduces material changes to stamp duty on life insurance contracts.

Starting in 2025, an annual stamp duty of 0.2% of the premium will apply to contracts. And insurance companies will have to prepay the amount to the Italian Treasury.

Under the law, insurance companies serve as tax withholding agents for their clients. A specific provision addresses contracts active as of 1 January 2025. The stamp duty accrued up to 2024 can be paid in instalments:

• 50% by 30 June 2025;
• 20% by 30 June 2026;
• another 20% by 30 June 2027; and
• the remaining 10% by 30 June 2028.

In both cases, the stamp duty will be deducted from the amount payable when the policy matures or is redeemed.

This new framework requires insurance companies to prepay the stamp duty and meet additional tax obligations. This is different from the previous system, where the duty was due when the policy was redeemed or withdrawn at the end of the client relationship. The provision also includes the annual payment of stamp duty for life insurance policies in classes III and V.

For the purposes of the government's tax estimate, the insurance reserves for classes III and V as of 31 December 2023 amount to around EUR257 billion. And the assumption is, as a cautious approach, that these reserves will remain constant over time, despite the observed upward trend. The accrued stamp duty is an estimated EUR1.883 billion, based on information available from the industry.