Seimas Committee approves taxation of insurance contracts, with exceptions for farmers

With the Seimas debating the government's proposal to levy a 10% tax on all non-life insurance contracts, the Seimas Committee on Rural Affairs on Wednesday agreed to a number of exemptions for the agricultural sector. 

The committee, while approving the Security Contribution Bill, also proposes to exempt contracts related to crops, livestock health and agricultural machinery. 

The Ministry of Agriculture (MoA) has been asked to exempt insurance contracts for crops, livestock diseases and agricultural machinery.

BNS wrote that Finance Minister Rimantas Šadžius said on Tuesday that the Seimas should take a political decision on the matter. However, he said he believed that crop and livestock disease insurance contracts could be exempted, but did not agree to exempt machinery insurance from the tax. 

Jolita Čičiurkienė, head of the Finance and Accounting Policy Implementation Unit at the MAFF, said on Tuesday that crop and livestock disease insurance is very sensitive as the state reimburses 50 per cent of the premium.

Viceminister – insurance contracts could become less than 10% more expensive

Finance Deputy Minister Kristupas Vaitiekūnas told the Seimas Committee on Rural Affairs on Wednesday that the tax on insurance contracts is applied in many European Union countries, not just one.  

„Tariffs range from 1 to a few percent and up to 20 to a few percent, for example, in Finland“, – claimed the Vice Minister.  

The tax is expected to raise €82-83 million in 2026 and up to €110 million in 2027, he said.  

K. Vaitiekūnas said that now is a „very good time“ for such a new tax.  

„Last year, the non-life insurance market grew by more than 10 per cent and profits of companies offering non-life insurance services increased by 30 per cent,“ said the Vice-Minister. 

He predicted that the introduction of this tax could make insurance contracts for the population less than 10 per cent more expensive.  

„Given that there is a fair amount of healthy competition in this market, it is foreseeable that passing on a 10% increase to consumers will not be so easy. Insurance is becoming more expensive at a rapid pace, so the price increase due to taxation could be less than 10%," explained Mr Vaitiekūnas.  

The tax reform package being considered by the Seimas foresees that all non-life insurance contracts, with the exception of third-party liability insurance for private cars, would be taxed at a rate of 10 per cent.