Our Group Legal Services department continuously monitors relevant changes in legislation and the requirements arising out of the applicable legal framework. It evaluates legally relevant changes and their implications for internal processes and policies. Ongoing legal monitoring is carried out for particularly significant compliance issues by various specialist departments.
The EU Insurance Distribution Directive Implementation Act, which entered into force in 2018, marked a notable change in the legal framework relating to compulsory further training for employees on the underwriting side. The law requires our underwriters to complete 15 hours of further training per year. The purpose of the training is to maintain specialist knowledge and personal skills. In the year under review the appropriate processes were implemented in order to ensure and document compliance with the content-related requirements of this compulsory training.
As a globally operating reinsurance undertaking, we are subject to the tax laws of the respective national jurisdictions. We pay the incurred taxes according to the applicable legal provisions of the countries in which we operate.
Within our Group-wide Tax Compliance Management System (Tax-CMS) our task areas, processes and responsibilities in relation to taxes are specified in the context of Group taxation and organisational policies. Our Group Tax Guideline defines our major principles of cooperation in matters of taxation. The entire Executive Board is responsible for this and collectively monitors its implementation. The regular verification of Group-wide compliance is the responsibility of Group Auditing. In addition, we have developed a Tax Strategy in accordance with the Group Strategy and published this on our website.
The tax expenditure of the Hannover Re Group recognised in the IFRS consolidated financial statement for the year under review was EUR 124.9 million higher than in the previous year at EUR 372.9 million (previous year: EUR 248.0 million). Along with the increased pre-tax profit compared to the previous year, this can be attributed principally to considerable tax-exempt earnings booked from the realisation of equities and equity funds in the previous year. The effective tax rate amounted to 24.6% (previous year: 19.2%). A breakdown of domestic and foreign taxes on income is provided in our Group Annual Report from page 251 onwards.