New guidance on taxation of the insurance premiums that U.S. insurers cede to foreign insurers and reinsurers could have some effect on life insurers.
The Internal Revenue Service appears to be referring mainly to property-casualty insurers in the guidance, in IRS Revenue Ruling 2008-15, which appeared on the IRS Web site March 7.
In the guidance, IRS officials rule that an insurer must pay an excise tax every time insurance premiums are ceded to a foreign insurer or reinsurer
A U.S. broker, policyholder or insurer can escape the excise tax requirement only if the non-U.S. insurer or reinsurer gets an excise tax closing agreement establishing its eligibility for a waiver under a U.S. income tax treaty, officials say.