The distribution of taxing rights between countries should be tackled globally, to avoid tariff wars. Any EU proposal should therefore be based on the solution agreed at the level of the Organisation for Economic Co-operation and Development (OECD) to avoid overlaps and the risk of double taxation and layering of additional taxes.
In the insurance industry, the definition of the scope is very important for an accurate assessment of the tax base. A possible taxation of digital businesses and activities should not hinder the ongoing digitalisation of the economy. It is important to highlight that, while insurers and reinsurers do not have highly digitalised business models, data is crucial to their activities.
Insurance Europe point out that: "most of the problems identified by the inception impact assessment and which the initiative aims to tackle do not affect (re)insurance. Insurance is a well-developed, diversified market with intensive competition rather than one or two dominant players, making market concentration highly unlikely."
In regards to the regulation and capital, for insurance, most of the business is local and where there is cross-border insurance and reinsurance, regulation requires capital to be located with the risk. In most cases the business model is based on companies with a local physical presence, as companies need a local market presence for market access, to enable them to be close to customers and brokers and meet the regulatory requirements to sell insurance.
Insurance is already subject to indirect taxes based on the location of the risk being covered, which often coincides with the location of the user. These include premium taxes, whose economic costs are significant for the whole industry. Any additional taxation will therefore likely result in increased costs for consumers.
Source: Insurance Europe