Following Validus, US IRS concludes excise tax inapplicable to wholly foreign insurance transactions

The US IRS, in Rev. Rule 2016-3 issued on January 19, has announced that it will no longer apply the one-percent excise tax under section 4371(3) to premiums paid on a policy of reinsurance issued by one foreign reinsurer to another foreign insurer or reinsurer.

The IRS said it would follow Validus Reinsurance, Ltd. v. United States, 786 F.3d 1039 (2015).  As such, the IRS said it has revoked Rev. Rul. 2008–15.

The Service also said that no inference should be drawn that its revocation of Rev. Rul. 2008–15 changes the liability for excise tax under section 4371 on any other policies of insurance or reinsurance.

See

• Rev. Rul. 2016–03