Taxes Consolidation Act 1997 section 710

Profits on life business

Section 710 adjusts the normal Schedule D Case I computational rules for the life business of an assurance company, sets out the taxation regime for IFSC foreign life assurance business, and provides for the treatment of policies maturing in the hands of policyholders who have become resident in the State.

• When computing profits of life business under Case I, profits belonging to, allocated to, or reserved for policyholders must be excluded, subject to clawback if reserved profits cease to be so reserved without being allocated to policyholders; foreign tax on excluded policyholder profits cannot be credited or deducted against the company's other tax liabilities.
• IFSC foreign life assurance companies (within the meaning of section 451) were chargeable to corporation tax under Case I at 10% (to 31 December 2005), and were not permitted to reduce those profits by amounts reserved for but not allocated to policyholders; the deletion of section 446 does not affect this treatment.
• Where a policyholder who was non-resident when issued a policy by an IFSC company subsequently becomes resident in the State, the company must deduct income tax at the standard rate on the growth in value of the policy during the policyholder's residence; for a retirement benefits policy, the deduction applies to 75% of that growth.
• Where a life company carries on both ordinary and industrial life assurance business, each is treated as a separate business; amalgamation of funds under the Insurance Act 1989 section 25 ends that separation, but pre-amalgamation losses of the industrial business may only be carried forward against profits attributable to that business.

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