2023 Connecticut General Statutes › Title 38a - Insurance › Chapter 698 - Insurers › Section 38a-91nn. - Direct premium receipts tax and assumed reinsurance premium receipts tax. Applicability of tax statutes.

(a) Each captive insurance company shall pay to the Commissioner of Revenue Services, on or before March first of each year, a tax at the rate of (1) thirty-eight hundredths of one per cent on the first twenty million dollars, (2) two hundred eighty-five thousandths of one per cent on the next twenty million dollars, (3) nineteen hundredths of one per cent on the next twenty million dollars, and (4) seventy-two thousandths of one per cent on each dollar thereafter, on the direct premiums collected or contracted for on policies or contracts of insurance written by the captive insurance company during the year ending December thirty-first next preceding, after deducting from the direct premiums subject to the tax the amounts paid to policyholders as return premiums which shall include dividends on unabsorbed premiums or premium deposits returned or credited to policyholders, except that no tax shall be due or payable as to considerations received for annuity contracts.
(b) Each captive insurance company shall pay to the Commissioner of Revenue Services, on or before March first of each year, a tax at the rate of (1) two hundred fourteen thousandths of one per cent on the first twenty million dollars, (2) one hundred forty-three thousandths of one per cent on the next twenty million dollars, (3) forty-eight thousandths of one per cent on the next twenty million dollars, and (4) twenty-four thousandths of one per cent on each dollar thereafter, on assumed reinsurance premiums collected or contracted for on policies or contracts of insurance written by the captive insurance company during the year ending December thirty-first next preceding, provided no tax under this subsection shall apply to premiums for risks or portions of risks that are subject to taxation on a direct basis pursuant to subsection (a) of this section. No tax under this subsection shall be payable in connection with the receipt of assets in exchange for the assumption by a captive insurance company of loss reserves and other liabilities of another insurer under common ownership and control, if such transaction is part of a plan to discontinue the operations of such other insurer and if the intent of the parties to such transaction is to renew or maintain such business with the captive insurance company.
(c) (1) The annual minimum aggregate tax to be paid by a captive insurance company, other than a sponsored captive insurance company, calculated under subsection (a) of this section shall be seven thousand five hundred dollars, and the annual maximum aggregate tax calculated under subsections (a) and (b) of this section shall be two hundred thousand dollars. In the case of a branch captive insurance company, the annual aggregate tax to be paid by such company shall apply only to the branch business of such company.
(2) In the case of a sponsored captive insurance company, the annual minimum aggregate tax to be paid by a sponsored captive insurance company shall be seven thousand five hundred dollars and shall apply to such company as a whole and not to each protected cell. The annual maximum tax to be paid by a sponsored captive insurance company shall be the aggregate tax liability, calculated under subsection (a) of this section, of each protected cell.
(d) The provisions of sections 12-204, 12-204d, 12-204g and 12-205 to 12-208, inclusive, shall apply to the provisions of sections 38a-91aa to 38a-91tt, inclusive, in the same manner and with the same force and effect as if the language of said sections 12-204, 12-204d, 12-204g and 12-205 to 12-208, inclusive, had been incorporated in full into this section and had expressly referred to the tax due under this section, except to the extent that any such language is inconsistent with a provision of said sections 38a-91aa to 38a-91tt, inclusive.
(e) (1) Except as specified in subsection (c) of this section and subdivision (2) of this subsection, two or more captive insurance companies under common ownership and control shall be taxed as though they were a single captive insurance company.
(2) Special purpose financial captive insurance companies shall not be consolidated with other captive insurance companies that are not special purpose financial captive insurance companies for purposes of calculating the tax due under this section.
(f) For the purposes of this section, (1) “common ownership and control” means ownership and control of two or more captive insurance companies by the same person or group of persons, and (2) “ownership and control” means:
(A) In the case of stock insurers, the direct or indirect ownership of eighty per cent or more of the outstanding voting stock of the insurer;
(B) In the case of mutual or nonprofit corporations, the direct or indirect ownership of eighty per cent or more of the surplus and the voting power of the corporation;
(C) In the case of limited liability companies, the direct or indirect ownership of eighty per cent or more of the membership interests in the company; and
(D) In the case of sponsored captive insurance companies, a protected cell shall be treated as a separate captive insurance company owned and controlled by the protected cell's participants.
(g) (1) The tax provided for in this section shall constitute all taxes collectible under the laws of this state from any captive insurance company, and no other occupation tax or other taxes shall be levied or collected from any captive insurance company by the state or any county, city or municipality within this state, except sales and use taxes and ad valorem taxes on real and personal property used in the production of income.
(2) The tax provided for in this section shall be calculated on an annual basis, notwithstanding policies or contracts of insurance or contracts of reinsurance issued on a multiyear basis. In the case of multiyear policies or contracts, the premium shall be prorated for purposes of determining the tax under this section.
(3) A captive insurance company may claim a nonrefundable tax credit of seven thousand five hundred dollars against the aggregate tax imposed under this section for the first calendar year on or after January 1, 2012, in which the company has liability under this section. The Commissioner of Revenue Services shall prescribe the form and manner in which such tax credit may be claimed.
(h) (1) All fees and assessments relating to captive insurance companies received by the Insurance Department shall be deposited in the Insurance Fund established pursuant to section 38a-52a. The Comptroller shall transfer annually to said fund eleven per cent of the tax collected pursuant to this section.
(2) The Comptroller may transfer from the Insurance Department's available appropriation, with the approval of the Secretary of the Office of Policy and Management, an amount equivalent to not more than two per cent of the tax collected pursuant to this section, to the Department of Economic and Community Development for reasonable expenses incurred to promote the captive insurance industry in this state. The Department of Economic and Community Development may also utilize the transferred moneys to collaborate with other entities to promote the captive insurance industry in this state.
(3) No payment for the maintenance of staff or associated expenses, including contractual services as necessary, shall be disbursed until the commissioner receives proper documentation regarding services rendered and expenses incurred. The commissioner shall establish the form and manner of such documentation.
(P.A. 08-127, S. 14; P.A. 09-74, S. 13; Oct. Sp. Sess. P.A. 11-1, S. 66; June 12 Sp. Sess. P.A. 12-1, S. 215; P.A. 13-232, S. 15.)
History: P.A. 08-127 effective January 1, 2009; P.A. 09-74 made technical changes in Subsecs. (a) and (b), effective May 27, 2009; Oct. Sp. Sess. P.A. 11-1 amended Subsec. (a) to change date of payment of direct premium receipts tax from the month of February to on or before March first, added new Subsec. (b) re assumed reinsurance premium receipts tax, redesignated existing Subsec. (b) as Subsec. (c)(1), added provision therein re applicability of annual aggregate tax to a branch captive insurance company, added Subsec. (c)(2) re applicability of annual aggregate tax to a sponsored captive insurance company, deleted former Subsec. (c) re penalty for failure to file return or pay tax, added new Subsec. (d) re applicability of tax statutes, redesignated existing Subsec. (d) as Subsec. (e)(1), added Subsec. (e)(2) re consolidation of special purpose financial captive insurance companies, redesignated existing Subsec. (e) as Subsec. (f) and amended same to redefine “common ownership and control” and define “ownership and control”, redesignated existing Subsecs. (f) and (g) as Subsec. (g)(1) and (2), amended Subsec. (g)(1) to replace “taxes on real and personal property” with “sales and use taxes and ad valorem taxes on real and personal property”, added Subsec. (g)(3) re tax credit, added Subsec. (h) re establishment of captive insurance regulatory and supervision account, and made conforming and technical changes, effective July 1, 2012, and applicable to calendar years commencing on or after January 1, 2012; June 12 Sp. Sess. P.A. 12-1 amended Subsec. (h) to delete former Subdiv. (1) re captive insurance regulatory and supervision account and former Subdiv. (5) re balance in account, redesignate existing Subdivs. (2) to (4) as Subdivs. (1) to (3), replace provision re deposits in account with provision re deposits in Insurance Fund in redesignated Subdiv. (1) and make conforming changes, effective July 1, 2012, and applicable to calendar years commencing on or after January 1, 2012; P.A. 13-232 amended Subsec. (b) to replace provision re tax due in the month of March of each year with provision re tax due date of March first of each year, effective July 1, 2013.