When is the policyholder liable to pay tax on insurance premiums?
Usually the insurer, such as an insurance company, is liable to pay tax on the insurance premiums it receives on the basis of an insurance contract. In certain situations, however, the policyholder is liable for the tax. In that case, the private individual or company that took out the insurance policy must register for tax on insurance premiums and file and pay the tax.
The policyholder is liable for the tax when they pay the insurance premium subject to tax to an insurer that does not conduct insurance business in Finland. Typically, such insurers operate in countries outside the European Economic Area (EEA).
The policyholder can use the Business Information System on the ytj.fi website to check whether the insurer is registered for the tax on insurance premiums. If the insurer is not found in the register, the policyholder can check with the Tax Administration whether the insurer is liable to pay tax on insurance premiums. You can contact the Tax Administration by sending email to: vakuutusmaksuvero(a)vero.fi.
How to register for tax on insurance premiums
To register for tax on insurance premiums, to file changes to your register information or to request to be removed from the register, use notification forms Y1 to Y6 of the Business Information System. Read more about the notifications (ytj.fi).
If you are a private individual, you can register only by filing paper form Y3. If you have a Business ID, however, use paper form Y6.
State that you are registering for tax on insurance premiums in field Additional information. Also state the date on which you want the registration to become effective. Enclose a free-form account with the form, specifying the types of insurance on which your liability to pay tax on insurance premiums is based.
How to calculate the tax on insurance premiums
Policyholders liable to pay tax on insurance premiums must calculate the tax on the basis of the insurance premiums they have paid during the month. The tax rate is 24%.
Example: The policyholder paid €100 in insurance premiums to the insurance company in November. The policyholder must file and pay €24 in tax to the Tax Administration. The tax on insurance premiums paid in November must be filed and paid by the 12th of the next month, i.e. December. Read more: How to file and pay tax on insurance premiums
Examples: When is the policyholder liable to pay tax on insurance premiums?
Example: Finnish company A sells company B, which it owns. Company A takes out warranty and indemnity insurance from a British insurance company for the sales transaction. The insurance contract is concluded with an insurance company that is located outside the EEA, in the United Kingdom, and that does not have a branch in Finland. In other words, the insurance company does not conduct insurance business in Finland.
In this case, company A must register for tax on insurance premiums and file and pay the tax to the Finnish Tax Administration.
Example: A Finnish private individual takes out an insurance policy on their musical instrument from a US insurance company. Because the insurance contract is concluded with an insurance company that is located outside the EEA, in the United States, and that does not have a branch in Finland, the insurance company is not deemed to conduct insurance business in Finland. In this case, the policyholder must register for tax on insurance premiums and file and pay the tax to the Finnish Tax Administration.
Example: A private individual takes out an insurance policy on their rally car from a British insurance company. The car is registered in Finland. Because the insurance company does not have a branch in Finland, it is not deemed to conduct insurance business in Finland. In this case, the policyholder must register for tax on insurance premiums and file and pay the tax to the Finnish Tax Administration.
Example: Swedish parent company A of an international group of companies takes out an insurance policy on the entire group from a British insurance company. The group has subsidiary B in Finland, and the subsidiary’s business is also covered by the insurance.
The insurance contract is concluded with an insurance company that is located outside the EEA, in the United Kingdom. Because the insurance company does not have a branch in Finland, it is not deemed to conduct insurance business in Finland. In this case, the policyholder – parent company A – must register for tax on insurance premiums in Finland and file and pay the tax to the Finnish Tax Administration.
Example: A Finnish company takes out an insurance policy on a real estate unit located in Finland. The insurance risk is high, so it is split between multiple insurers. This is called coinsurance.
The insurers include a Finnish insurance company, a non-Finnish insurance company located within the EEA, and an insurance company located outside the EEA. The insurance company outside the EEA does not have a branch in Finland. The Finnish insurance company and the insurance company in the EEA are registered for tax on insurance premiums.
Each insurer’s liability to pay tax on insurance premiums is assessed separately. The Finnish and the EEA insurance company conduct insurance business in Finland, so they are liable to pay tax on insurance premiums. Because the insurance company outside the EEA does not have a branch in Finland, it is not deemed to conduct insurance business in Finland. The policyholder must therefore register for tax on insurance premiums for the part of the insurance policy that was taken out from the non-EEA insurance company, and file and pay the tax on insurance premiums on that part of the insurance.