Due to the lack of coherent regulations in the tax and insurance laws, ambiguous and frequently changing provisions, no real understanding of the peculiarities of the insurance sector by the regulator, particular care and attention has been and is required when dealing with the tax aspects of insurance activities.
The most common tax risk areas arising on the basis of substantive regulations, identified by us during our long lasting practice, are connected with:
- acquisition costs -verification of the correctness of timing of recognition of acquisition costs;
- active and passive reinsurance - verification of the correctness of timing of recognition of reinsurance revenues and costs and amounts subject to taxation;
- recourse receivables - verification of the correctness of timing of recognition of revenue from recourse receivables;
- vindication costs - establishment of the correct tax treatment of costs of court proceeding and their refunds;
- calculation of tax on capital gains - in many cases our Team has assisted insurance companies in the preparation of the methodology of calculating and remitting the 19% withholding tax on income from investing insurance premiums;
- tax treatment of marketing campaigns and contests;
- tax treatment of voluntary payments made by Insurers to the insured (Polish: kulancja)
- tax aspects relating to conversions of opening balances, in particular, their influence on the total amount of tax technical-insurance provisions;
- settlement of financial instruments for tax purposes;
identification of the tax result of Polish branches of foreign insurance companies.
