Captive insurance companies of non-insurance groups

Key transfer pricing considerations

Captive insurance companies are very much in the spotlight at present and this article focuses on the February 2020 OECD material on captives as well as recent US case law on “abusive” micro-captives, as well as wider international tax considerations.

Recently there has been an increased focus on captive insurance companies by the OECD, with the 2017 revised OECD Transfer Pricing Guidelines including an example of captive insurers and the OECD’s February 2020 “Transfer Pricing Guidance on Financial Transactions” including a section on captive insurance. In addition captives have been under particular scrutiny by the IRS, with resulting US case law on these arrangements.

This article discusses:

  • What is a captive insurance company?
  • The OECD’s new guidance on captive insurance transactions
  • Other tax perspectives including permanent establishment, residency and Diverted Profits Tax
  • U.S. perspective on captives including an update on case law

To discuss these issues in more detail, please contact one of our insurance specialists below.

Key contacts

Seb Ma’ilei
Partner – Deloitte UK
UK Insurance Tax Lead
Tel: +44 (0) 20 7007 1596
Matej Cresnik
Principal – Deloitte Tax LLP (US)
Americas Insurance Transfer Pricing Lead
Tel: + (1) 212-436-7760
Jeremy Brown
Director – Deloitte UK
Financial Services Transfer Pricing
Tel: +44 (0) 20 7007 5350
Hannah Simkin
Associate Director – Deloitte UK
Financial Services Corporation Tax
Tel: +44 (0) 20 7303 4472
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