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

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

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.