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

In Belgium, IPT also applies to 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 for IPT purposes (cf. location of the risk and available exemptions).
• The applicable IPT rate is the same as that of 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, an extension of the deadline for filing IPT returns is available as per 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 must be filed, and the related tax paid, by 20 October 2024. Affected insurance intermediaries and insurers should press ahead with implementation, considering the guidance provided by the Circular, to comply by the end of the leniency period.