Italian Regulators Issue Guidance on Life Insurance Stamp Duty Accounting
A working group formed by Banca d'Italia, Consob, and Ivass has issued guidance on the accounting treatment for advance payments of stamp duty on life insurance policies. The document clarifies how insurance companies should recognize an asset arising from new legislation requiring annual stamp duty payments.
New rules for stamp duty payments
New Italian legislation (Law 30 December 2024, n. 207) has altered the payment schedule for stamp duty on life insurance policies.
Previously due at reimbursement or redemption, the duty must now be paid annually by insurance companies starting from 2025. This change creates an 'asset towards customers' for insurers, as the amounts paid in advance will be deducted from the policy's payout at maturity or redemption.
This asset, arising from a regulatory provision, is non-interest bearing and will be recovered only in the future, posing a unique accounting challenge for entities applying IAS/IFRS standards.
Navigating IFRS without direct guidance
Given the specific characteristics of this new asset and the absence of a directly applicable international accounting standard, the working group emphasizes the need for a coherent approach under IAS 8, 'Accounting Policies, Changes in Accounting Estimates and Errors.'
IAS 8 requires management to use judgment in developing an accounting policy that provides relevant and reliable information when no specific IFRS applies.
The document notes that neither IFRS 9 (Financial Instruments), IAS 38 (Intangible Assets), nor IAS 12 (Income Taxes) are directly applicable.
Therefore, companies must develop their own policy based on analogies from similar IFRS requirements.
Clarity for a complex liability
This guidance provides much-needed clarity for insurance companies navigating new tax obligations.
While the reliance on IAS 8 highlights a gap in direct IFRS applicability, the proposed analogies offer a pragmatic path forward.
Ultimately, consistent application of these principles will be crucial for transparent financial reporting in the sector.