Domestic life assurance
The taxation of domestic life assurance companies and their policyholders depends on when the life assurance business was written. These companies are authorised and regulated by the Central Bank of Ireland.
Life assurance business written on or after 1 January 2001 is referred to as ‘new basis business’. The life company is generally exempt from tax on the profits it earns on behalf of its policyholders. Instead, those profits roll up within the life policy until a ‘chargeable event’ occurs. An exit tax is generally deducted by the life company when the chargeable event occurs.
Life assurance business written on or before 31 December 2000 is referred to as ‘old basis business’. Old basis business is generally apportioned between shareholders and policyholders and taxable as follows:
- The shareholders’ share of profits are taxed at the standard rate of corporation tax (currently 12.5%).
- The policyholders’ share of profits are taxed at a corporation tax rate equal to the standard rate of income tax (currently 20%).
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