Corporate Insurance & Regulatory Bulletin – February 2012

Originally published 5 March 2012

Keywords: insurance, corporate, reinsurance, Finance Bill

UK – proposed changes to the taxation of insurance groups

TAXATION OF CONTROLLED FOREIGN COMPANIES

HM Treasury has recently closed a consultation on the tax regime for controlled foreign companies ("CFCs"). CFSs are non-UK tax resident companies controlled by UK companies. Under the existing rules, a UK company can be assessed to UK tax on profits realised by the CFCs in its group where those CFCs pay less than 75% of the tax on their income that they would have paid had they been resident in the UK, and the departure of several UK-headquartered insurance groups has been attributed to this rule. HM Treasury is believed to be aiming to reverse this trend with its changes to the CFC tax regime.