Tax Related Developments

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This updates our February 10, 2010 posting.  According to media reports, New York Insurance Department (the “Department”) Superintendent James Wrynn announced at a membership meeting of the Association of Insurance & Reinsurance Run-Off Companies (AIRROC) that the Department’s tax working group is reviewing whether a revived New York Insurance Exchange (the “Exchange”) should request a lower federal corporate tax rate.  The current federal corporate tax rate is approximately 35%. 

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Read More New York Insurance Exchange Considering Requesting Lower Federal Tax Rate

President Barack Obama’s recently released proposed Budget of the U.S. Government for the Fiscal Year 2011 (the “Proposed 2011 Budget”) would disallow the deduction for excess non-taxed reinsurance premiums paid to foreign affiliates by a U.S. insurance company.  The Proposed 2011 Budget projects that this disallowance would result in tax receipts of $22 million in 2011, and totaling $223 million over the next five years. 

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Read More Obama Proposes Budget That Would End Foreign Reinsurer Tax Advantages

In an interview with Bloomberg, Chaucer’s chief executive officer Bob Stuchbery has indicated that Chaucer will consider redomiciliation out of the UK this year, noting that he would much prefer that Chaucer remained in the UK under a more competitive corporation tax environment. 

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Read More Chaucer Latest Lloyd’s Entity to Consider New Domicile

The Internal Revenue Service (IRS) issued a private letter ruling on December 11, 2009, resolving a taxpayer’s question as to whether its business as a captive reinsurer is “insurance” for tax purposes.  The IRS provides private letter rulings upon individual taxpayer request in which the IRS interprets and applies tax law to a taxpayer’s specific set of facts. 

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Read More In Private Letter Ruling, IRS Says Captive Reinsurance of Fronted Pools is “Insurance” for Tax Purposes

The European Court of Justice (ECJ) has recently released its judgment in the case of Swiss Re Germany Holding GmbH v Finanzamt München für Körperschaften, confirming that a transfer of a portfolio of life reinsurance contracts, outside of a business transfer, will be subject to value-added tax (VAT) at the standard rate. 

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Read More EU: European Ruling on VAT Goes Against Reinsurers

As the House of Representatives prepared to leave for its month-long August recess last week, Rep. Richard Neal (D-MA) introduced legislation to repeal a controversial tax deduction used by foreign reinsurers.  The bill, H.R. 3424, would disallow the deduction for excess non-taxed reinsurance premiums with respect to United States risks paid to affiliates. 

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Read More Insurance and Financial Regulatory Reform Update

The UK’s tax authority, Her Majesty’s Revenue and Customs (HMRC), has introduced new regulations relating to technical provisions made by general insurers, including members underwriting general insurance business at Lloyd’s. 

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Read More UK: New Regulations Relating to Calculation of General Insurance Technical Provisions for Tax Purposes

The New Jersey Department of Banking and Insurance recently issued Bulletin 09-21, which advises that amendments to N.J.S.A. § 17:22-6.59 and 17:22-6.64 were enacted on June 29, 2009.  The amendments change the surplus lines premium tax rate from three percent to five percent. 

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Read More New Jersey Increases Surplus Lines Premium Tax Rates

Reps. Dennis Moore (D-Kan.) and Scott Garrett (R-N.J.) recently announced their intention to reintroduce the Nonadmitted and Reinsurance Reform Act (the “NRRA”).  As we previously reported here and here, the NRRA would establish national standards on how states may regulate and tax surplus lines insurers and also sets national standards concerning the regulation of reinsurance. …
Read More House of Representatives to Reintroduce the Nonadmitted and Reinsurance Reform Act