Question ID: 3150
Regulation Reference: (EU) No 2015/35 - supplementing Dir 2009/138/EC - taking up & pursuit of the business of Insurance and Reinsurance (SII)
Topic: Solvency Capital Requirement (SCR)
Article: 207
Status: Final
Date of submission: 30 Aug 2024
Question
In calculating the loss-absorbing capacity of deferred tax for year-end assessments, should the SCR shock be assumed to impact the fiscal results of year X or year X+1? Specifically, should the shock occur on December 31st or January 1st?
Background of the question
The impact of assuming a shock as per 31/12 or 1/1 can be relevant in the amounts available to apply carry back and carry forward.
EIOPA answer
According to Q&A 2967, “The instantaneous event occurs on the first day of the period." Therefore, for the calculation of the loss-absorbing capacity of deferred tax in year-end calculations, the assumption should be that the SCR shock takes place at the beginning of January 1st of year X+1, ensuring consistency with the approach in Q&A 2967 on mass lapse.