2023-06-10 03:25:32
In 2020 the government raised the tax on insurance premiums, known as IPS, from 6% to 8%. Currently, these insurance premiums will continue to rise due to the economic and social context, but what are these taxes that aggravate them? How does the rise in IPS affect us? Is your life insurance affected? Today, from Perea Groupwe tell you what taxes on insurance premiums exist, what is the IPS and which insurances it affects.
What is the Insurance Premium Tax (IPS)?
Like any other service or product you buy, an insurance premium is associated with a tax that you will see reflected on the receipt. In this way, instead of VAT, in insurance the Tax on Insurance Premiums is paid.
However, the IPS has nothing to do with VAT: this is 21%, while the IPS has gone, in 2021, from 6% to 8%.
What insurances does it affect?
Although there are many insurances that are exempt, the insurances affected by the IPS are mainly the following:
In this way, it is evident that the increase in taxes on insurance premiums affects the price of many of the insurances and premiums that we citizens have. But does it affect your life insurance? Let’s talk about exemptions.
What insurances are exempt from the IPS tax?
As we have mentioned, not all insurances carry IPS, there are some that are exempt! If you were worried that this tax would affect the price of your life insurance, this is one of those that are exempt. However, there are some life insurance guarantees that IPS can carry, your insurance brokerage it will help you to know.
On the other hand, mandatory social insurance, collective insurance, systems that may be alternatives to pension plans, and health insurance are also exempt.
How has the increase in the tax affected insurance premiums?
The increase in the tax on insurance premiums that occurred in 2020, meant a change in this tax from 6% to 8%. This 2% increase affected the majority of insurance policies and/or supplements with an effective date after the date on which it was applied, as well as insurance with installment payment.
Although insurance has risen in price for the reason of the tax, it must be borne in mind that this is not the only reason for which they are doing so. In addition, with the social and economic context in which we live, insurance premiums will rise, since insurers are affected by the fact of having to assume serious costs when paying claims: the price crisis, the war Ukraine , the consequences of the pandemic, among other causes.
From Perea Grup, we help you in any price increase process and we accompany you in the changes you need, Contact us.
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