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Insurance Premiums Tax Rises

The Spanish Government has increased, through the General State Budget Law for 2021 (hereinafter the Law), the tax rate on insurance premiums from the current 6% to 8%.

In a study, the comparator Acierto explains that this increase will mainly affect Auto and Home policies, products contracted by 95% of Spanish families.

According to his calculations, this increase will mean an additional 25 to 30 euros per year for families, based on the fact that most families have more than one insurance policy. And he warns that companies will eventually pass this impact on to the consumer. At Uniteco they are more precise and detail that a policy with a net premium of €100, which would currently pay an IPS of €6, will pay €8 in 2021.

However, Uniteco reminds that not all insurances are taxed with the IPS. For example, this measure will not affect mandatory and collective social insurances that implement alternative systems to Pension Plans and Funds. Neither to life insurance, except for supplementary guarantees, nor to credit and surety insurance. Combined agricultural insurance is also excluded, as are pension plans, reinsurance operations and international merchandise and passenger transport insurance.

Meanwhile, according to Acierto, health insurance will foreseeably face an increase in health VAT to 21%.

Despite this increase, the GPI in Spain is below the European average. In Germany, it is 19%; in the United Kingdom, 12.5%; and in Italy, between 12.5% and 21.5%.

 

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