20 April 2015

Following our earlier tax alert this month about the reintroduction of the Greek TEA EAPAE Contribution, we have contacted the Fund to obtain official clarification of the new rules. Unfortunately, the Fund was not prepared to confirm our understanding in writing but the Fund’s Director gave us a verbal confirmation summarised below.

For context, it is envisaged that the new rules shall provide for a temporary Contribution to be introduced with effect from 1 January 2015, until the Hellenic Council of State reaches a decision. If the Council agrees to the Fund’s request then the temporary Contribution will be superseded by a permanent Contribution. Speculation suggests this will be July 2015.

Legal Basis

It was stated that, for the moment, there is no legal ground for the Contribution to be temporarily introduced. However, it is believed that the Hellenic Council of State will decide in favour of the Fund’s request, i.e. the abolishment of the Contribution to be revoked, and that it will be prudent for insurers to be compliant with the Funds proposal.

There is a strong political argument in Greece that the Council will approve the new rules and that a permanent Contribution will be incorporated into a legislative decree. A significant amount of pensions are paid by the Fund to employees of insurance companies and the new Government has assured the Fund that there will be no pension cuts.

Calculation

Both Domestic and Freedom of Service Insurers are liable to pay the temporary Contribution if they provided insurance cover in 2014. As such, insurers must pay 20% of the TEA Contribution in 2015 that was declared and paid in the corresponding month of 2014 until the matter is resolved with the Hellenic Council of State.

Declaration & Payment

No monthly returns or online submissions are required. FiscalReps, on behalf of our clients, shall pay the temporary Contribution within the normal 120 days deadline to the Fund’s bank account by:
  • using the Tax ID of each client; and
  • stamping the Bank Receipt Document with each client’s stamp (this will provide proof of payment).

Thus, the first payment in respect of January 2015 is due by 31 May 2015.

Interest & Penalty Charges

The Fund could not confirm whether interest or penalty charges would apply to Insurers that did not pay the temporary Contribution albeit we expect this point to be confirmed in the Hellenic Council of State’s decision. However, the Fund did point out that there is a high possibility that interest or penalties will be charged in retrospect if insurers did not comply with the Fund’s request.

Finally

FiscalReps’ appreciates that our clients require certainty as to whether they should pay an Insurance Premium Tax (IPT) in an EU/EEA Member States and/or globally and, as a dedicated IPT service provider we consider it our role to do this. However, there will be situations, such as this, where we do not have certainty and our role then becomes one of providing our clients with the available information in the market place that allows you to make the best IPT compliance decisions based on the perceived risk involved.

If you require any further information please contact:
Petros Pachis
e: petros.pachis@fiscalreps.com
or
Paul Chater
e: paul.chater@fiscalreps.com