The Risk Transformation (Tax) Regulations 2017

Corporation tax

4.—(1) No liability to corporation tax arises in respect of the profits arising from the activity of insurance risk transformation carried out by a qualifying transformer vehicle.

(2) For the purposes of paragraph (1), the following are not treated as an activity of insurance risk transformation—

(a) administrative or management activities, or

(b) subject to paragraph (3), holding investments in excess of the minimum amount reasonably required to satisfy the fully funded requirement in relation to the company or, in the case of a protected cell company, the cell.

(3) Paragraph (2)(b) does not apply in relation to investments which were reasonably required to satisfy the minimum fully funded requirement in relation to a risk assumed under a contract of insurance until the expiration of 90 days from the date on which all liabilities under that contract have been satisfied.

(4) For the purposes of this regulation, “the fully funded requirement” is the requirement imposed by Articles 319 and 326 of the Commission Delegated Regulation (EU) 2015/35 of 10 October 2014 supplementing Directive 2009/138/EC of the European Parliament and of the Council on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II), or the equivalent requirement set out in rules made by the Prudential Regulation Authority(1).

(1)

Articles 319 and 326 of the Commission Delegated Regulation (EU) 2015/35 of 10 October 2014 supplementing Directive 2009/138/EC of the European Parliament and of the Council on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II) apply to transformer vehicles which are special purpose vehicles within the meaning given by Article 13(26) of the Directive 2009/138/EC. Regulation 8 of S.I. 2017/**** imposes an obligation on the Prudential Regulation Authority to make equivalent rules for transformer vehicles which are not special purpose vehicles.