26 March 2014

The Insurance Premium Tax (IPT) rate on ‘Non solidaires’ Health & Sickness insurance contracts increased from 9% to 14% with effect from 1 January 2014.  ‘Non solidaires’ contracts arise when the insurer requires medical information from the policyholder in order to calculate the premium or sets the premium based on the health status of the person insured. We assume such contracts fall under EU Class 2 insurance business.

Unfortunately, the French tax authorities did not communicate the rate change to fiscal agents in France nor is there any reference to the rate change on the tax authority guidelines. Further to FRL’s research, Article 1001, (2) (ter) of the IPT legislation provides the legal reference for the IPT rate change.  

By way of background, the IPT rate change was voted by the French Parliament at the end of 2013 as part of the Project of Law for the Financing of Social Security (PLFSS).  As part of the Project, the PLFSS is looking to revise the definition of ‘solidaires’ Health & Sickness contracts, which currently constitutes 94% of Health & Sickness contracts.  

The French insurance market advises that the first draft of a forthcoming Governmental Decree proposes to revise the definition and introduces new guidelines for ‘solidaires’ contracts that could reduce their number, and correspondingly increase the number of ‘non solidaires’ contracts that fall within the new 14% IPT rate.

Perhaps as a consequence of the uncertainty, the tax authorities have not updated the tax authority guidelines.  Furthermore, and from an IPT technical perspective, it is unclear, for example, whether any transitional IPT rules exist for the payment of instalments.

FiscalReps is currently in dialogue with the French tax authorities to clarify any outstanding matters and ensure that we, and hence our clients, are notified of any future changes in the French IPT legislation.