EconomyThis is how the rise in insurance tax planned...

This is how the rise in insurance tax planned by the Government affects you


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The Executive has decided to increase the Insurance Premium Tax (IPS) from 6% to 8%. We review some keys to that rise

Among all the tax increases that the Government has introduced in the Draft Law on General State Budgets for 2021, one of them has to do with the insurance contracts that are signed in our country. Specifically, the Executive has decided to increase the Tax on Insurance Premiums (IPS) from 6% to 8%, which will translate into an additional cost for Spanish families of between 28 and 30 euros per year. These are some keys to that rise:

Does it affect all

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No, the rise is not raised for all policies equally. Health care, illness, credit and surety, reinsurance operations and those related to pension plans, combined agricultural insurance, collective or mandatory social insurance used as an alternative to pension plans and funds will be exempt. . In addition, those related to insurance operations related to the international transport of travelers or goods, operations related to ships or aircraft destined for international transport -except for private recreational activities- and life insurance are also excluded. , unless there are additional guarantees.

How much will the tax collection increase?

The Government estimates that the tax increase will lead to an increase in collection of almost 25% compared to the current figure, which is about 500 million euros more.

How many families will be affected by the rises?
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Practically all of them. According to the president of the Unespa association,

Pilar Fruits, in a recent speech on the situation of the sector in Spain, insurance, in its different forms, “is present in 96% of households in Spain”. For this reason, he assured, “it is not possible to touch the taxation of insurance and that this gesture only affects minorities.” Taking into account the data of the employer itself, the households affected by the increase in the IPS amount to 14.6 million, in the case of car insurance; 13.7 million, in-home insurance; 8.4 million, in that of deaths; 751,442, in travel and almost 1.1 million in non-life insurance other than health. In addition to families, companies will also be affected by the rise, as many have contracted various insurance for the development of their activity, such as civil liability, theft or damage to your production facilities.
What type of insurance do we Spanish hire?

The vast majority of families in Spain have taken out some type of insurance. Almost 79% have auto insurance; 71.72% have hired it for their main home; 44.7% have one death and 21.3% one health. Somewhat less common are travel assistance insurance (3.93%) and civil liability (4.66).

What is the reaction of the sector?

Faced with the rise in the Tax on Insurance Premiums, as has happened with the changes in the taxation of individual savings plans, the insurance sector has been very critical and in complete disagreement. “The Government has designed the Budgets for 2021 and in this design, there are several elements that go in a direction that I do not consider correct. I am referring to the increases in the fiscal pressure derived from the increase in two points of the tax on insurance premiums and the toughening in the treatment of contributions to social security systems, “assured Pilar Frutos in a recent speech before the main firms in the sector.

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