EIOPA · 3150

Solvency Capital Requirement (SCR)

Name: Solvency Capital Requirement (SCR): EIOPA Q&A — EU Financial Regulatory Q&A
Creator: European Insurance and Occupational Pensions Authority
License: https://creativecommons.org/licenses/by/4.0/

Regulation: (EU) No 2015/35 - supplementing Dir 2009/138/EC - taking up & pursuit of the business of Insurance and Reinsurance (SII)
Article: 207
Topic: Solvency Capital Requirement (SCR)
Submitted: 2024-08-30
Answered: 2024-10-25

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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

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.

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.

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This Q&A is published by European Insurance and Occupational Pensions Authority and is non-binding. It does not constitute legal advice. Updated weekly from official ESA sources.