Fiscal Representative
Since the introduction of Freedom of Services insurance for multi-jurisdiction programmes the requirement for a local fiscal representative has been a key control measure for many tax authorities, though some (Belgium, United Kingdom) are beginning to move away from this position.
Tax authorities look to the local representative to properly calculate, record and pay over IPT and Parafiscal charges. This includes retaining details of most insurance contracts in-country. The tax authorities have the right to inspect these (and the details of IPT calculations) at short notice. Should any queries arise from such an inspection or if the tax authorities wish to carry out an audit, the local fiscal representative is their first port of contact.
In the event of the insurer (or insured) not settling taxes or penalties, the fiscal representative may potentially be next in line in terms of liability. There have indeed been numerous instances where the tax authorities have exercised this right, making fiscal representatives sensitive to potential losses when taking on a new insurer. As a result, a fiscal representative may insist on a full bank guarantee/cash deposit from a reputable, local bank to cover any potential tax liabilities they may thus be exposed to.
