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HMRC internal manual

International Exchange of Information Manual

Financial Institutions: Branches of insurance companies

Financial Institutions: Branches of insurance companies

Insurance companies frequently operate local introducing, sales or distribution offices outside the jurisdiction of tax residence of the head office. Where an insurance company that is a Financial Institution has a branch in another jurisdiction, the branch will be a Financial Institution in its own right in that local jurisdiction, see IEIM400620.  It will therefore be necessary to establish whether the Financial Accounts of the insurance company are held or maintained by the branch or by the head office in order to determine the reporting obligations.

When determining whether Financial Accounts of an insurance company are held or maintained by the head office or a branch for CRS purposes, a Financial Institution should consider where the account is maintained in an ordinary sense. The jurisdiction in which an account is maintained is a question of fact having regard to all the circumstances. In the case of the Financial Accounts of an insurance company, the following criteria should be taken into account:

 

• Regulation of the branch as an insurer and application of the regulatory framework of the jurisdiction in which the branch is located to the Financial Accounts of the branch (assets and insurance liabilities booked in the branch)

• Customer Due Diligence obligations of the branch with respect to the policy holder

• Activities of the branch (i.e. sales and sales support or substantive administration of the policy)

• Place of acceptation of the underwriting risk and/or the policy

• Contracting party of the policy

• Presence of separate records for customer policies sold through the branch

• Location of the office issuing the policies

• Law applicable to the policies sold by the branch

• Other relevant criteria

 

Where, based on the above criteria, the conclusion is that the Financial Account is considered to be held or maintained by the branch, the branch will fulfil the due diligence and reporting obligations under the CRS. Where, based on the above criteria, the conclusion is that the Financial Account is considered to be held or maintained by the head office, the head office will fulfil the due diligence and reporting obligations under the CRS.

In particular, where the branch merely acts as an introducer to policies that are then issued by the head office, these Financial Accounts would be deemed to be held by the head office which would fulfil the due diligence and reporting obligations under the CRS. Where the book of a branch is in run-off (i.e. the branch is not accepting new business and not subscribing new policies), the determination as to whether the Financial Accounts are held or maintained by the branch or the head office should be made on the basis of the location of the data and infrastructure in order to adequately undertake that due diligence and reporting.