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

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Cedant and re-insurer being group companies: re-insurer not resident in the UK

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9.—(1) A re-insurance arrangement is prescribed where conditions 1 to 5 are satisfied in relation to the arrangement.

(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 the re-insurance arrangement is effected by C through a permanent establishment of C situated in the UK.

(4) Condition 3 is satisfied—

(a)in cases where the re-insurance arrangement is not effected with a permanent establishment of R, where—

(i)R is resident in an EEA state (other than the UK where the UK is a member of the EEA); and

(ii)R is chargeable to tax under the laws of the territory in which it is resident in respect of the investment return; or

(b)in cases where the re-insurance arrangement is effected with a permanent establishment of R, where—

(i)R is resident in an EEA state (other than the UK where the UK is a member of the EEA);

(ii)the permanent establishment of R is not situated in the UK; and

(iii)the permanent establishment of R is chargeable to tax under the laws of the territory in which it is situated in respect of the investment return.

(5) Condition 4 is satisfied where none of the obligations of R under the re-insurance arrangement are subject to a further re-insurance arrangement.

(6) Condition 5 is satisfied where—

(a)the charge to tax on the investment return is on a basis equivalent to that of the I minus E rule; and

(b)the rate of tax on the investment return is no less than the policyholder’s rate of tax(1).

(1)

For policyholder’s rate of tax, see section 102 of the Act.

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