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The Insurance Companies (Taxation of Re-insurance Business) Regulations 2018

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PART 2Section 57 of the Act and excluded business

Section 57 of the Act and excluded business

4.  Except where regulation 13(2) applies, the descriptions of “excluded business” in this Part have effect for the purposes of section 57 of the Act(1).

Excluded business: group companies in the UK

5.—(1) Subject to paragraphs (5) and (6), life assurance business being re-insured is “excluded business” where conditions 1 to 3 are satisfied.

(2) Condition 1 is satisfied where—

(a)the cedant (“C”) is a 90% subsidiary of the re-insurer (“R”);

(b)R is a 90% subsidiary of C; or

(c)C and R are both 90% subsidiaries of the same body corporate.

(3) Condition 2 is satisfied where—

(a)C is resident in the UK; or

(b)C is resident outside of the UK and—

(i)the re-insurance is effected by C through a permanent establishment of C situated in the UK; and

(ii)that permanent establishment is within the charge to corporation tax by virtue of section 5(2) of the Corporation Tax Act 2009(2) in respect of the business being re-insured.

(4) Condition 3 is satisfied where the business being re-insured is BLAGAB in the hands of C.

(5) Business being re-insured by a non-investment risk arrangement which would be excluded business by virtue of conditions 1 to 3 being satisfied is not excluded business.

(6) Business being re-insured is not excluded business by virtue of this regulation where condition 2 in regulation 8(3) is satisfied in relation to that business.

Excluded business: overseas companies

6.—(1) Life assurance business being re-insured is “excluded business” where conditions 1 and 2 are satisfied.

(2) Condition 1 is satisfied where the cedant—

(a)is resident outside of the UK;

(b)does not have a permanent establishment situated in the UK; and

(c)is not within the charge to corporation tax by virtue of section 5(2) of the Corporation Tax Act 2009 in respect of the business being re-insured.

(3) Condition 2 is satisfied where the business being re-insured—

(a)is not overseas life assurance business(3) in the hands of the cedant; and

(b)is business where the benefits provided for under each policy or contract are determined by reference to the value of matched assets(4) which consist wholly or substantially of land in the United Kingdom.

(4) In paragraph (3)(b), “land” includes—

(a)buildings and other structures;

(b)land covered with water;

(c)any estate, interest, easement, servitude, right or licence in or over land.

(1)

By virtue of section 57(2)(e) of the Act, basic life assurance and general annuity business (“BLAGAB”) does not include re-insurance of life assurance business other than excluded business. Therefore, re-insurance arrangements which are excluded business are BLAGAB.

(3)

See section 61(2) and (3) of the Act.

(4)

For the definition of “matched” in relation to assets, see section 138 of the Act.

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