Banca d'Italia clarifies IFRS accounting for insurance stamp duty advances
A joint document from Banca d'Italia, Consob, and Ivass clarifies the accounting treatment under IAS/IFRS for advance stamp duty payments by insurance companies on life policies. The guidance addresses changes introduced by the 2025 Budget Law, which mandates annual payment of stamp duty from 2025.
The new stamp duty regime
The 2025 Budget Law (Law 30 December 2024, n. 207) modified previous regulations, requiring insurance companies to pay stamp duty annually for life insurance policies from 2025. Previously, payment was deferred until policy redemption or maturity.
Additionally, past accumulated stamp duty amounts (up to 2024) must now be paid in installments until June 2028. These advance payments by insurance companies create an "asset towards customers," as the amounts are deducted from the benefit paid at policy maturity or redemption.
This new regime necessitates specific accounting treatment under IAS/IFRS, particularly for life policies classified as financial liabilities.
Navigating IFRS without direct guidance
The document highlights the "asset towards customers" has unique characteristics, lacking a directly applicable IAS/IFRS standard.
Neither IFRS 9 (Financial Instruments), IAS 38 (Intangible Assets), nor IAS 12 (Income Taxes) are directly relevant.
Consequently, the guidance emphasizes applying 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, by referring to IFRS dealing with similar issues and the Conceptual Framework.
Complex accounting, clear direction
This guidance offers crucial clarity on a complex accounting issue from new tax legislation, fostering consistent financial reporting.
It highlights IFRS application challenges without direct standards, demanding significant professional judgment.
For insurance firms, this interpretation is vital for accurate balance sheets and regulatory adherence.