Commentary

D7.584 Overseas life assurance business ('OLAB')

Corporate tax
Corporate tax | Commentary

D7.584 Overseas life assurance business ('OLAB')

Corporate tax | Commentary

D7.584 Overseas life assurance business ('OLAB')

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 have always been various reliefs available to life insurers for business written with overseas policy holders. The general reform of the life tax legislation in FA 1990 codified these reliefs into the OLAB regime. One of the key drivers for change was to exclude OLAB income and gains from the I-E regime because there was the potential for conflict between the taxing rights of the UK and the policy holder's home country. This was addressed by excluding OLAB from the I-E system and instituting a separate charge on its profits. That regime has since been subject to change in the intervening period as a result of EU pressures (particularly the 3rd Life Assurance Directive1 which gave all EU companies freedom to write business throughout the EU without establishing a permanent establishment overseas) and lobbying from the industry that the UK regime was unnecessarily restrictive. The general trend has therefore been one of a progressive relaxing of the type of business that falls within the definition of OLAB coupled with a tightening of the compliance regime to ensure that the

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