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New Administrative Guidance on German Insurance Premium Taxes
Multinational groups often take out international insurance policies to provide group-wide cover against their worldwide risk exposure.
Multinational groups often take out international insurance policies to provide group-wide cover against their worldwide risk exposure. Normally, a master policy is taken out by the parent, supplemented by local policies for the local subsidiaries. These companies should therefore be aware of an amendment to the German Insurance Tax Act (VersStG) passed on 10 December 2020.
Under the amended regulations, taxability in Germany now exists in principle if an insurance relationship relates to a permanent establishment or other facility of persons other than individuals located outside the EEA (i.e. EU, Norway and Liechtenstein) pursuant to Sec. 1(2) sentence 2 no. 4 VersStG.
The prerequisite for this is that the policyholder has its registered office in Germany, presenting the risk of double taxation: German insurance tax plus the corresponding tax in the country where the permanent establishment or other facility is located. In contrast, the regulations remained unchanged with regard to taxability in Germany if an insurance relationship with a non-EU/EEA insurer directly or indirectly relates to a company, a permanent establishment or another facility located in Germany pursuant to Sec. 1(3) no. 3 VersStG.
New Administrative Guidance on German Insurance Premium Taxes
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