Taxation (International and Other Provisions) Act 2010 section 371GA

The basic rule

Section 371GA sets out the basic rule for determining which profits from a controlled foreign company's insurance business are brought within the CFC charge gateway.

• Insurance profits of a CFC are caught if they derive from contracts with UK-connected companies or from contracts with UK residents that are linked to goods or services supplied by a UK-connected company.
• Reinsurance contracts are only caught to the extent that the original underlying insurance contract would itself have been caught under the rules.
• Where premiums are wholly attributable to a UK company's exempt foreign permanent establishment, those premiums are excluded from the charge.
• Where the CFC is resident in an EEA state, profits are only caught if the insured (or original insured, in reinsurance cases) had no significant commercial reason, other than UK tax reasons, for entering into the insurance contract.