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Tax Updates For Reinsurers
Gross Roll-Up Regime
In October 2012, Revenue updated the guidelines for the "gross roll-up" taxation regime for life-assurance companies. The guidelines now confirm that, as of 1 June 2012, all returns and payments of tax under the Life Assurance Exit Tax (LAET) regime must be made online via the Revenue Online Service. The updated guidelines also confirm the changes in LAET rates which were brought in by Finance Act 2012 and are effective since 1 January 2012.
Ireland currently allows non-taxable entities, such as insurance companies, to join Irish VAT groups. The European Commission has argued that all members of VAT groups should be taxable persons. The Commission requested that Ireland (together with certain other Member States, including the UK) amend its legislation in relation to VAT grouping and referred the issue to the Court of Justice of the European Union (the CJEU).
The opinion of Advocate General J??skinen in EC v Ireland (Case C85/11) was published in November 2012. In this opinion the Advocate General concluded that the practice adopted by Ireland of permitting non-taxable (ie VAT exempt) persons to be members of a VAT Group does not infringe the VAT Directive, and therefore "from the perspective of fiscal neutrality the inclusion of non-taxable persons in a VAT group makes no difference to the pursuit of the goals of the VAT grouping regime".
While an Advocate General's opinion is not binding, the CJEU has tended to follow these opinions. This opinion is therefore positive for the Member States, including Ireland, awaiting final rulings and for the insurance industry.
Corporations within the insurance sector should review all updates and investigate the amended documentation which applies to them. It seems that VAT groups will still be open to non-taxable entities, however it is important to wait for the final ruling of the CJEU to be definite.