Italian Claims Reporting

There has been a great deal of uncertainty over the exact requirements of the claims reporting legislation introduced by the Italian tax authorities.

The legislation itself is also vague in some key areas and that, together with the newness of the legislation has meant that parties affected are finding it hard to establish their exact requirements and exposures.

The legislation was introduced as an anti-tax avoidance measure targeted at Italian domiciled individuals and organisations that provide services to claims beneficiaries.

It is merely a reporting requirement. There are no tax or cash flow implications.

The main implications for insurers writing Italian business under Freedom of Services legislation are:

• Insurers need to appoint someone responsible for making this declaration on their behalf. The legislation does not specify a reporting party, but suggests that anyone who is involved in the payment of claims for the Insurer in Italy could be responsible. Ultimately the insurer is responsible.

Reporting is only required for:

• Claims paid to Italian resident beneficiaries
• Payments made by insureds to Italian resident third parties who provide services to the insureds in connection with claims payments

Where the third party invoices the insurer directly for services provided, there is no requirement to report these transactions.

Actions for Insurers:

Identify which party is best placed to collate this information and try to engage that party to provide the reporting function.

Ensure that management information systems are gathering the required information in order to make a complete declaration.

Consider and budget for the additional costs and resources required to comply with this new legislation.

Conclusion:

The legislation does create an extra layer of administrative burden for the insurer, with little identifiable benefit to them.

Therefore it is important to consider how this reporting process and be made as simple and resource efficient as possible, whilst ensuring that they remain compliant with the legislation.

It is also important for the insurer to consider and engage with the party which is best placed to make these declarations to the Italian tax authorities on their behalf.