The Third Life Assurance Directive was transposed into Irish law on 29 November 1994 with the making of regulations by the Minister for Enterprise and Employment (the "Regulations"). An insurer authorised in another European Union member state may now carry on business in Ireland without the requirement for an authorisation issued by the Irish regulators. Article 10, reflecting the essential thrust of the Directive, states that:
  • "the financial supervision of an insurance undertaking, including the carrying on of insurance business either by way of services or through branches shall be the sole responsibility of the home member state."
While the Directive seeks to achieve liberalisation under the services regime and the establishment regime, Irish domestic tax provisions mean that, in practice, only the establishment regime will be implemented.

Section 20 of the Capital Gains Tax Act, 1975 excludes from the charge to capital gains tax the proceeds of policies of assurance or contracts for deferred annuities on the life of any person. However, section 20A of the Act specifically provides that this favoured tax treatment will not apply to policies or contracts taken out with a life assurance company which is established outside Ireland or through a branch in Ireland of a foreign established assurance company.

This difference in treatment plainly discriminates against companies which are not within the Irish tax charge in respect of their investment income and to some extent, nullifies the intention behind the liberalism of the services regime. The rationale in Ireland is that this treatment enables parity to be maintained as between, on the one hand, the situation of insurers established in Ireland in relation to whom the quid pro quo for the capital gains tax exemption enjoyed by the policy holder is tax paid by the insurer on investment income and on the other hand, companies whose investment income is not subjected to Irish tax.

A similar scenario which, prima facie, appeared to offend EU law is found in a case (Bachman) decided by the European Court of Justice where a pre-requisite for a tax deduction in Belgium was that life insurance contributions must be paid to a Belgian company. This position was successfully defended.

Conditions for Establishing a Branch

The Regulations simplify considerably the requirements for establishment of a branch in Ireland by a company which is currently authorised to conduct life business within the relevant class in another EU member state.

The supervisory authority in the home member state must furnish the Irish authorities with the appropriate information including a certificate attesting that the minimum solvency margin is met. Under the Directive, the home member state authority is obliged to submit the [QQ] relevant information to the branch member state regulators within three months of its receipt from the applicant company. The appropriate information must include:
  • the name of the member state in which the branch is to be established;
  • a scheme of operations setting out the types of business envisaged and the branch's structural organisation;
  • the address in the branch member state at which documents may be obtained and to which communications may be addressed; and
  • the name of the authorised agent of the branch who must be a person possessing sufficient powers to bind the insurance undertaking in relation to third parties and represent it in relation to the regulatory authorities and courts of the branch member state.
The Directive provides that the branch may be established and commence business "on receiving a communication" from the competent authorities in the branch member state and if no communication is received, on the expiry of the two months from the date of submission of the information by the home member state regulator to the branch member state regulator.

The Irish Regulations provides that the Irish Department of Enterprise and Employment will issue its notification to the supervisory authority in the home member state and the Department may specify conditions under which, in the interest of the "general good", the insurance business may be conducted in Ireland. The "general good" criteria require conformity with consumer credit regulations, consumer information and services protection legislation, insurance intermediary rules and any other general requirements, particularly those relating to the marketing and selling of insurance.

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