The new obligation of taxpayers in the area of insurance tax

The obligation to pay insurance tax may also apply to companies that are not insurance companies and do not conduct insurance business. We would therefore like to draw your attention to the obligation to pay insurance tax in special cases.

The Act No. 213/2018 Coll. on Insurance Tax entered into force on 1 January 2019. Insurance tax is a new indirect tax which will apply to non-life insurance lines of business, if the insured risk is located in the Slovak Republic.As a general rule, the insurance company is obliged to pay insurance tax. However, we would like to inform you that this obligation may concern also a Slovak company which may be liable to pay insurance tax, provided that:

  • the insurance premium costs in non-life insurance ​​​​​​​lines of business (for example property insurance, damage insurance, travel insurance, etc.) are recharged to a Slovak company, for example, from its parent or sister company by the reason that the insurance policy covers a Slovak company, the insured risk is located in the Slovak Republic and the insurance policy is concluded with a foreign insurance company that does not pay insurance tax in the Slovak Republic. For the purpose of insurance tax, under foreign insurance companies shall be meant insurance companies from the third countries outside the EU and the EEA;
  • a Slovak company will conclude a non-life insurance policy directly with a foreign insurance company.

For a better understanding, please refer to an example below, when a Slovak company is liable to pay insurance tax.

Example

Part of the non-life insurance costs (for example insurance costs related to property located in the Slovak Republic) was recharged to a Slovak company by its foreign sister company, which concluded the insurance policy with an insurance company from Canada. The Canadian insurance company has no branch in the Slovak Republic.
Who is the person liable to insurance tax?

Answer 

If a Canadian insurance company provides non-life insurance to a foreign company and this company recharges part of this insurance premium to a Slovak sister company (by the reason that a Slovak company is covered by the insurance policy), whereas the insured risk is located in the Slovak Republic, then this insurance is subject to insurance tax in the Slovak Republic and the person liable to pay insurance tax is the Slovak sister company (from the part of recharged insurance costs relating to this Slovak sister company).

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