On December 22, 2017, the President signed into law H.R. 1, known generally as the Tax Cuts and Jobs Act (the “TCJA”), which makes widespread changes to the Internal Revenue Code. The TCJA includes a number of provisions that impact the taxation of the insurance and reinsurance sector, particularly in the context of cross-border affiliate insurance and reinsurance.

The TCJA adds new Section 59A to the Code, designed to prevent the erosion of the United States tax base by U.S. taxpayers through the use of deductible payments (“base erosion payments”) made to related non-U.S. taxpayers. Some portion of insurance and reinsurance premiums paid to related non-U.S. persons may trigger the application of these new provisions, thus potentially making the implementation of a program utilizing such insurance/reinsurance more expensive for U.S. taxpayers.

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