Prepared by Davide Settembre
Collective life insurance policies entered by the employer in the interests of its employees, in order to guarantee them an additional benefit of the remuneration, represent a component of the employment income (fringe benefit).
The amounts subsequently collected by the beneficiary of the policy should be subject to the typical tax regime of the capitals paid under insurance policies. This is what the Italian Revenue Agency clarified with the response to the ruling request no. 383 of last September 18.
The question and the proposed solution
The ruling request has been filed by an employee of a Municipality in relation to a collective insurance policy entered by the same entity in favor of the municipal police officers.
In particular, according to the negotiation scheme, the liquidation of the sums would have taken place through the policyholder (the Municipality), to whom the company would have paid the sums due for each individual insurance position and who would have applied the withholding tax and paid the net sums to the beneficiaries.
In particular, the applicant considered that the procedure proposed by the Municipality, to equate the insurance policy with a form of supplementary pension and, therefore, to apply a separate taxation system, was not correct.
The applicant proposed, instead, to apply in the case in question the tax regime typical of the life insurance contracts of savings and investment that provides, in case of total or partial redemption or in case of natural expiry, the application of a substitute tax of 26% (article 26-ter of Presidential Decree no. 600 of 1973).
Response
The Revenue Agency has, first of all, noted that, in the proposed case, the amount provisioned, with the insurance policy, by the Municipality in favor of the municipal police officers, are intended to guarantee an additional benefit for the employees.
As previously clarified by the financial administration, if the beneficiaries of the policy are the workers, the amount of the aforesaid contributions (so-called “fringe benefit”) represents, therefore, an employment income component pursuant to the article 51, paragraph 1, of PR Decree no. 917 of 1986 (see the Resolution no. 391/E of 21 December 2007)[1].
Finally, the Revenue Agency has specified that the sums subsequently collected by the beneficiary of the policy should be subject to the typical tax regime of the capital income arising from the life insurance contracts. The capital amount collected should be, therefore, subject to the substitute tax referred to in Article 26- ter mentioned above, whose rate varies depending on the income accrual period:
- 12.50% for the income accrued until December 31, 2011;
- 20% for the part of income accrued from 1° January 2012 until 30 June 2014;
- 26% for the income accrued starting from 1° January 2014.
[1] This is without prejudice to the application of paragraph 3 of the same article 51, according to which the value of the emolument in kind does not contribute to the formation of the employee’s income if, added to the value of any other goods and services in kind granted to the employee in the same tax period, the total amount of Euro 258.23 is not exceeded.
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