Question ID: 2027
Regulation Reference: Guidelines on loss-absorbing capacity of technical provisions and deferred taxes
Topic: Technical Provisions (TPs)
Article: 35
Template: SR.25.01
Status: Final
Date of submission: 23 Sep 2019
Question
This is regarding the interpretation of the Deffered tax at the regulation level:
We can have the following behavior
- the deffered tax calculated with average tax rate (1) or not (2)
- no calculation of average tax rate
For example, if we take the case of S/SR.25.01 :
1. Calculate Deferred Tax = Yes
a. Approach avg tax rate = 1
R0150 = filled, R0640 = filled, R0150 =
R0640
b. Approach avg tax rate = 2
R0150 = filled , R0640 = empty
2. Calculate Deferred Tax = No
R0150 = empty (no data in the table )
R0640 = empty (as the choice will be 3 which is
different than 1)
In the identical datapoint, as there no filter, so could you please help us to know if our interpretation is correct or not so that we can implement it as required.
EIOPA answer
The interpretation is not fully correct. There are three options for C0109/R0590 following three different approaches:1.“Yes". The undertaking calculates LAC DT using an average tax rate approach.
2.“No". The undertaking calculated LAC DT, but does not use the average tax rate approach.
3.“Not applicable as LAC DT is not used". The undertaking does not use LAC DT.
Under option 1, C0120 can be left empty, but C0110 and C0130 are to be filled in. Therefore, R0150 and R0640 are to be filled in under option 1. Under option 2, C0110, C0120 and C0130 are to be filled in. Therefore, R0150 and R0640 are also to be filled in. Under option 3, C0110, C0120 and C0130 should be empty (i.e. R0600 – R0690 should be empty) and R0150 should be 0 or empty.