Commentary

D7.517 Insurance special purpose vehicles – securitisation vehicles

Corporate tax
Corporate tax | Commentary

D7.517 Insurance special purpose vehicles – securitisation vehicles

Corporate tax | Commentary

D7.517 Insurance special purpose vehicles – securitisation vehicles

The rules in this division apply for accounting periods beginning before 1 January 2013. For accounting periods beginning on or after 1 January 2013 see Division D7.4.

There is already legislation dealing with the taxation of securitisation companies in the wider financial services sector1. As a first step that legislation has been widened to extend it to cover instruments issued by ISPVs used for capital markets transactions for periods of account beginning on or after 1 January 2007 and current on 4 December 20072. Such transactions might include a securitisation of the value of a block of in-force business, the issuing of bonds based on longevity or mortality exposure or allowing third parties to invest in and share the profits from a particular block of business.

It was recognised that the existing capital markets taxation regime, under which securitisation companies are taxed on the small 'turn' they make over the life of the transaction rather than the profits shown in their accounts, did not fit well with the way that ISPVs used for securitisations were likely to measure their economic return. As a result a separate regime was introduced for such companies3. In broad terms an ISPV used for a capital markets transaction will be taxed on the basis of its

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