Question ID: 1785
Regulation Reference: (EU) No 2009/138 - Solvency II Directive (Insurance and Reinsurance)
Topic: Valuation of Assets and Liabilities other than TPs
Article: Article 75
Status: Final
Date of submission: 18 Nov 2018
Question
In local GAAP and Tax GAAP value of DAC is same say EURO 1000. Therefore, no DTA/DTL created.
In IFRS, DAC is EURO 1200. Hence, DTL is made on difference of Euro 200 @ 32% i.e 64.
When eliminating DAC in Solvency II following approach is followed:
1. DAC credited by 1200.i.e there is no balance left in Solvency II Balance sheet.
2. Impact of 32% is given on EUR 1200. i.e EUR 384 is debited.
3. Further, the balance effect is given on Reserve. Please suggest if the approach followed is correct.
EIOPA answer
SII does not recognise deferred acquisition costs (DAC). For the SII balance sheet both the DAC and the corresponding deferred taxes have to be eliminated.