Taxation Issues Relating to Captive Insurance Companies

Analysis of the tax treatment of premiums paid to captives. Case law from the US, Germany, the Netherlands, Norway and Australia are compared in order to establish the conditions under which a captive is considered to be a bona fide insurance company. The application of the generally accepted transfer pricing methods is discussed, such as the comparable uncontrolled price method, the cost-plus method and the transactional net margin method, in calculating the arm's length premium rate. Administrative practice in Norway dealing with captives in the oil industry is the point of departure for this discussion.