Italy: Premium taxes overview

A brief summary of premium tax obligations in Italy provided by the Lloyd’s Tax Department for the Lloyd’s market.

All insurance business in Italy will be subject to the Italian Insurance Premium Tax (IPT) regime; however, certain premiums can benefit from either a reduced rate or an exemption. Whilst the current standard rate of IPT in Italy is quite high at 21.25%, various reduced rates can apply to specific risks covered under marine, aviation and transport insurance, motor insurance, and also certain property insurance in relation to agriculture. For details on which types of insurance can benefit from a reduced rate, and the specific reduced rate which applies, please consult Crystal.

Exemptions, although few, also apply to life, reinsurance, export credit (only when covering a risk guaranteed by the Italian State) and insurance covering property registered at the Italian Ministry of Cultural Heritage. Risks located in the Vatican City, whilst having a different regulatory authorisation to Italian risk, are also considered as exempt from IPT.

In addition to IPT, certain insurance premiums are also subject to additional parafiscal charges. The most common of these is a 1% levy called the Solidarity Fund for Victims of Extortion. The levy is applicable to premiums covering the following classes of risk: fire, theft, general liability, and motor damage and third party liability. Further details of all parafiscal charges applicable in Italy can be found in Crystal.

Ultimately, ensuring that Italian premium taxes are charged and reported correctly is the responsibility of the Lloyd’s underwriter in all circumstances. Therefore, any liabilities and/or penalties imposed by the tax authority due to incorrectly paid tax, which can be up to 400% of the tax underpaid, will be for their account.

Ultimately, ensuring that Italian premium taxes are charged and reported correctly is the responsibility of the Lloyd’s underwriter in all circumstances. Therefore, any liabilities and/or penalties imposed by the tax authority due to incorrectly paid tax, which can be up to 400% of the tax underpaid, will be for their account.

For further information please refer to Crystal.