2005 Vermont Code - § 6014. — Tax on premiums collected

§ 6014. Tax on premiums collected

(a) Each captive insurance company shall pay to the commissioner of taxes, in the month of February of each year, a tax at the rate of 38-hundredths of one percent on the first 20 million dollars and 285-thousandths of one percent on the next 20 million dollars and 19-hundredths of one percent on the next 20 million dollars and 72-thousandths of one percent 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 31 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; provided, however, 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 taxes in the month of February of each year a tax at the rate of 214-thousandths of one percent on the first 20 million dollars of assumed reinsurance premium, and 143-thousandths of one percent on the next 20 million dollars and 48-thousandths of one percent on the next 20 million dollars and 24-thousandths of one percent of each dollar thereafter. However, no reinsurance tax applies to premiums for risks or portions of risks which are subject to taxation on a direct basis pursuant to subsection (a) of this section. No reinsurance premium tax shall be payable in connection with the receipt of assets in exchange for the assumption 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) The annual minimum aggregate tax to be paid by a captive insurance company calculated under subsections (a) and (b) of this section shall be $7,500.00, and the annual maximum aggregate tax shall be $200,000.00. The maximum aggregate tax to be paid by a sponsored insurance company shall apply to each protected cell only and not to the sponsored captive insurance company as a whole.

(d) A captive insurance company failing to make returns as required by chapter 211 of Title 32 or failing to pay within the time required all taxes assessed by this section, shall be subject to the provisions of sections 5868, 5869, 5873 and 5875 of Title 32.

(e) Two or more captive insurance companies under common ownership and control shall be taxed, as though they were a single captive insurance company.

(f) For the purposes of this section common ownership and control shall mean:

(1) in the case of stock corporations, the direct or indirect ownership of 80 percent or more of the outstanding voting stock of two or more corporations by the same shareholder or shareholders; and

(2) in the case of mutual or nonprofit corporations, the direct or indirect ownership of 80 percent or more of the surplus and the voting power of two or more corporations by the same member or members.

(g) 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 ad valorem taxes on real and personal property used in the production of income.

(h) Annually, ten percent of the premium tax revenues collected pursuant to this section shall be transferred to the department of banking, insurance, securities, and health care administration for the regulation of captive insurance companies under this chapter.

(i) [Repealed.]

(j) 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. (Added 1981, No. 28; amended 1985, No. 170 (Adj. Sess.), § 2, eff. May 7, 1986; 1987, No. 47, § 3, eff. May 13, 1987; 1989, No. 72, § 2; 1989, No. 225 (Adj. Sess.), § 25(a); 1993, No. 89, §§ 15-17; 1993, No. 152 (Adj. Sess.), § 1, eff. May 16, 1994; 1995, No. 180 (Adj. Sess.), § 38(a); 1999, No. 38, § 14, eff. May 20, 1999; No. 49, § 218; 1999, No. 84 (Adj. Sess.), § 11, eff. April 19, 2000; 2001, No. 71, § 13a, eff. June 16, 2001; 2003, No. 55, § 7, eff. June 4, 2003, see effective date notes set out below.)