The bill on the Tax Plan 2013 provides for an increase in the Dutch insurance premium tax rate from 9.7% to 21%, to take effect as of January 1, 2013. The tax revenue generated by this increase is expected to be EUR 1,222 million in 2013.
Contrary to earlier presented proposals, the effective date has been brought forward to January 1, 2013. A special rule has now been included in the bill which will take effect if the Ministry of Finance considers that too little insurance premium tax has been remitted in the first quarter of 2013 as a result of actions anticipating the measure. The Lower House will vote on the bill on Tuesday, November 20, 2012.
The Ministry of Finance’s position is that regardless of the premium’s payment date, the new 21% insurance premium tax rate will always apply to premiums relating to insurance policies commencing on or after January 1, 2013, or to insurance policies that are renewed or automatically renewed on or after January 1, 2013. No benefit is therefore to be gained by paying the annual premium in advance before January 1, 2013.
The following will apply if the insurance coverage commences before January 1, 2013:
· an insurance premium tax rate of 9.7% if the premium due date is before January 1, 2013; and
· an insurance premium tax rate of 21% if the premium due date is on or after January 1, 2013.
To prevent such anticipatory actions in the insurance sector, a special rule has been included in the bill pursuant to which 21% insurance premium tax can be levied on that part of the premium paid in the period October 1, 2012, through December 31, 2012, and which relates to insurance coverage after March 31, 2013. Insurance policyholders always have the right to terminate current insurance policies in accordance with the policy conditions and to take out a new insurance policy; in this case with a commencement and premium due date before January 1, 2013. Only 9.7% insurance premium tax would be owed if the annual premium is paid at once. However, the special rule means that the only benefit to be gained from policy changes made after September 30, 2012, will be limited to three months of lower insurance premium tax. In this way, the same situation is achieved as would have applied to monthly and quarterly premium payments had the increased rate taken effect as of April 1, 2013. The special rule will also affect policyholders who take out new insurance policies in the period October 1, 2012, through December 31, 2012, or whose insurance policies were renewed or automatically renewed in this period. The special rule will only take effect if the Ministry of Finance considers that anticipatory actions have been taken, as a result of which the total amount of insurance premium tax reported by the insurance sector is less than the Ministry of Finance has estimated.