Tax Related Developments

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On February 9, 2009, the Connecticut Legislature held a public hearing regarding on House Bill 6349, An Act Concerning Sales Tax on Services (the “Bill”).  The Bill would eliminate the current exemption from the sales tax for professional, insurance, and personal services transactions found in Conn. Gen. Stat. § 12-412(11) and would specifically add professional, insurance, occupational, and personal service transactions to those services that are subject to the state’s sales and use tax under Conn. Gen. Stat. § 12-407(a)(37). 

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Read More Connecticut Legislatures Proposes Sale Tax on Insurance Service Transactions

On December 10, 2008, the Senate Finance Committee (the “Committee”) held a meeting to discuss proposed legislation (the “Proposal”) that would reduce the purported competitive advantage in tax treatment received by affiliated foreign reinsurers by altering the tax code to disallow deductions for a portion of reinsurance premiums ceded by insurance companies to affiliated foreign reinsurers who are not subject to U.S. taxation. …
Read More Senate Finance Committee Discusses Reinsurance Tax Legislation

The IPT Tribunal has ruled that an administration fee payable to Homeserve GB Limited (Homeserve), an FSA authorised insurance intermediary, is subject to IPT, notwithstanding that the fee was payable under an administration contract which was separate from the insurance policy. …
Read More UK: Insurance Premium Tax (IPT) Attributable to Separately Identified Contracts

Last month, Representative Richard Neal (D- Mass.) introduced H.R. 6969 in response to concerns voiced by the Coalition for Domestic Insurance Industry (the “Coalition”) alleging that favorable tax treatment for foreign insurance groups is making it increasingly difficult for U.S. insurers to compete.  H.R. 6969 attempts to reduce the purported competitive advantage by altering the tax code to disallow deductions for a portion of reinsurance premiums ceded to affiliated insurance companies not subject to U.S. taxation. …
Read More Representative Neal Introduces Reinsurance Tax Legislation

The Chilean government recently announced that it will raise the capital gains tax rate applicable to foreign insurers, foundations and sovereign funds that operate in the country.  In a joint release, the Ministerios de Hacienda y Economia announced that the regulation will be sent to the Controlaria General this week. …
Read More Chile To Raise Capital Gains Tax Applicable To Foreign Insurers, Foundations and Sovereign Funds

In a Technical Advice Memorandum (“TAM”) released by the IRS in July, the IRS determined that a large retailer’s purchase of warranty reimbursement policies from a related captive insurance subsidiary that reimburse the retailer for expenses incurred under its manufacturer’s warranty obligations did not constitute an insurable risk for federal tax purposes. …
Read More Purchase of Warranty Reimbursement Polices from an Affiliated Captive does not Create an Insurance Risk for Federal Tax Purposes

The Internal Revenue Service announced on February 20, 2008 that it is withdrawing the proposed IRS Regulation §1.1502-13(e)(2)(ii)(C).  The withdrawn regulation would have disallowed as a current deduction for federal income tax purposes any premium payments to an affiliate captive insurer if the captive received as little as 5% of its total premiums from affiliates on the same consolidated tax return. …
Read More Proposed Captive Tax Deduction Rule Withdrawn by IRS

In a recently released revenue ruling, the IRS has established procedures for determining if insurance written through protected cell companies constitutes insurance for federal income tax purposes.  This is a result of the previously issued Notice 2005-49, in which the IRS requested comments from the public on this issue.  Concurrently, the IRS issued Notice 2008-19, in which it is requesting comments from the public on guidance regarding the issues that arise if such arrangements actually do constitute insurance. …
Read More IRS Requests Comments on a Revenue Ruling Concerning Taxation of Protected Cell Captive Arrangements

The EC has adopted proposals for a directive and a regulation aimed at modernising and simplifying the VAT rules for financial and insurance services. The proposals contain an updated definition of the exempt financial and insurance services. 

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Read More Value Added Tax (VAT): The European Commission (EC) proposals to modernise the current legislation for financial services and insurance