Insurance companies, branches of foreign insurance companies, reinsurance companies and branches of foreign reinsurance companies operating in Slovakia are subject to the statutory audit of financial statements (IFRS). Our company uses its years of experience in the insurance industry and takes into account the specifics of the client while maintaining an objective and independent approach while performing the audit. We communicate any findings and further steps with our clients during the audit.
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We assist insurance companies to achieve compliance with Slovak and international regulations and reporting requirements. Solvency II is a planned reform of insurance standards within the European Union which will require the introduction of a new approach to risk and capital management, and introduce increased reporting and modelling systems requirements.
The main challenge concerning the implementation of this new regulation is the combination of additional regulatory requirements with the daily insurance business. Investing in the implementation of this new regulation should be reflected in the improvement of the management and decision-making. More sophisticated risk-based capital management aims to not only meet the requirements of the new regulation, but also to provide a better picture of the relationship of risk and income in order to allocate capital in an improved manner and ensure sustainable growth. Last but not least, the implementation of a new reporting system for Solvency II brings opportunities and challenges for improving existing processes and systems.
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Implementation of these standards will bring the long-awaited standardisation of reporting in the insurance sector. In addition to the impact on reporting, it will also affect the form of insurance products or the way the results are evaluated by analysts and investors.
In cases of IFRS 4, the new form of presentation of the accounts associated with the new valuation model of insurance contracts and related assets and liabilities will not only lead to a reassessment of incentive programmes for the insurance companies’ management, but it is likely to have an impact on the development of new products, the structure of the distribution network and the IT environment.
Since the introduction of the new standards, IFRS and Solvency II cannot be considered separately. There are discussions on the possible use of synergies taking place at European Union level. These are found mainly in the areas of data management and modelling, and their goal is to avoid the costs associated with dual building or dual treatment systems.
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The Foreign Account Tax Compliance Act (FATCA), adopted in 2010 in the United States as part of the Act (Hiring Incentives to Restore Employment) in order to prevent evasion of U.S. persons, also entails responsibilities for Slovak financial institutions. Considering postponing the effective date of the Act in 2014, the first wave of fear regarding the new responsibilities has slowly faded and some financial institutions have started to feel that the topic FATCA may be forgotten. The experience of the farsighted shows that is worth having some idea about what the approved provisions of the new law will mean for their institution, and then closely monitoring their current development.
In accordance with the provisions of FATCA, financial institutions defined in this Act (mainly insurance companies, banks, asset managers and pension funds) should close a contract with the Internal Revenue Service (IRS).
The conclusion of such an agreement is only the first step towards the harmonisation of internal processes in financial institutions with FATCA legislation. The successful implementation of all requirements of this Act will be aligned to all key areas, in particular procedural practices, risk management and IT and analysed legal and tax implications of the measures.
In the absence of an agreement with the IRS, or failure to comply with other statutory conditions, foreign financial institutions may face significant penalties - any incoming U.S. payment falling under FATCA law will be subject to 30% withholding tax. FATCA also obliges all cooperating foreign financial institutions to collect certain information about account holders. If the account holder refuses to provide the requested information, the account will be classified as recalcitrant and any incoming U.S. payment credited to their account will also be subject to 30% withholding tax to be withheld by the adjudicatory cooperating financial institution and subsequently handed over to the IRS.
Our professionals are part of the Global Information Reporting (GIR) group, which brings together specialists who deal with international tax law, but who are also experienced experts in the field of local legislation and the business environment.
How we can help