ITALY Law and Practice Contributed by: Giovanna Aucone and Debora Gobbo, FIVERS Studio Legale e Tributario
2.3 Taxation of Premium The Italian legislation provides for a specific tax on insurance premiums and relevant accessories (TIP) which is governed by Law No 1216 of 1961, which has undergone numerous amendments over time. The TIP is levied by the insurance company on premiums col- lected with respect to categories of insurance policies identified by the law and based on rates that vary from 2.5% to 21.25% depending on the nature of the risk insured. Insurance companies are subject to specific requirements regarding annual reporting and payment of the TIP levied. The law provides for specific exemptions inspired by social or systematic considerations, excluding from the scope of TIP, for example, life insurance policies, including those of a financial nature, as well as certain forms of compulsory insurance. TIP applies only in the case that the territoriality requirement is satisfied in accordance with the spe- cific criteria set out by the law. Whilst the taxable person of TIP is generally the insur- ance company (either Italian or non-Italian operating under the freedom to provide services or with estab- lishment in Italy), the latter is entitled to exercise a right of recourse against the policyholder who there- fore bears the economic burden of the tax. TIP operates as an alternative to other indirect taxes, including registration tax on insurance contracts and relevant receipts, stamp duties and VAT. Insurance premiums are VAT exempt, which results in a limita- tion to the deductibility of VAT incurred on acquisition of goods or services by insurance companies. 3. Overseas Firms Doing Business in the Jurisdiction 3.1 Overseas-Based Insurers or Reinsurers Access to the Italian insurance market is subject to the granting of an authorisation by IVASS (unlicensed activities are strictly prohibited). However, Italian law differentiates the applicable authorisation procedures depending on whether the insurance undertaking is
established in a member state of the EU or in a third (non-EU) country. EU insurance undertakings may operate in Italy under the freedom of establishment (FOE) or the freedom to provide services (FOS), in accordance with the notifi- cation procedures laid down by the Solvency II frame- work. Under this regime, an undertaking authorised in its home member state is entitled to carry out insur- ance business in Italy without obtaining a separate Italian licence, provided that it has duly notified its home-country supervisory authority of its intention to establish a branch in Italy or to operate cross-border on a freedom-to-provide-services basis. The proce- dure is based on a supervisory notification mecha- nism, pursuant to which the home supervisory author- ity transmits the relevant information concerning the insurance undertaking and its programme of activity in Italy to IVASS. Non-EU undertakings are subject to a distinct and more stringent authorisation regime. Non-EU insur- ers intending to carry out insurance business in Italy – whether in the life or non-life sectors – are required to establish a branch in Italy. Italian law does not per- mit third-country insurers to operate under the FOS regime, and unlicensed insurance activities are strictly prohibited. Before commencing operations, a third-country insurer must obtain prior authorisation from IVASS to establish the Italian branch. Authorisation is granted exclusively for activities conducted in Italy and may cover either the life or non-life classes (dual authori- sation, life and non-life, is permitted only where it is already authorised in the home jurisdiction and it may regard the combination of life insurance with non-life accident and health classes only). The Italian branch must be managed by at least one legal representative – either a natural person or a legal entity – vested with powers to conduct the insurance business in Italy and meeting the necessary integrity, fairness, professional and competence requirements that the Italian law and regulations provide for mem- bers of the management bodies of Italian insurers.
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