North Carolina Removes Captive Premium Tax Provisions from House Bill

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May 02, 2019 |

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North Carolina legislators have stripped provisions from a broader bill, H.B. 220, that would temporarily exempt captive insurance companies that redomesticate to North Carolina from state premium taxes.

That action, state captive executives say, was due to legislators' recognition that they did not have enough time to consider the proposal, not because of opposition to the measure.

"Legislators recognized they had a full plate with the budget and other legislation to consider," said Tom Adams, president and CEO of the North Carolina Captive Insurance Association in Southern Pines, North Carolina.

"They will get to it. It just isn't going to move as quickly as we had hoped," Mr. Adams said, adding that the proposal could be considered later this year or, more likely, in next year's short legislative session.

Under the provision, captives licensed in another domicile and redomesticated to North Carolina prior to January 21, 2021, would be exempt from prorated taxes for the year the redomestication occurs as well as for premium taxes for the following year.

The exemption would expire on January 1, 2022.

The premium tax exemption has been strongly backed by North Carolina insurance regulators.

"This provision is yet another benefit for captive insurance companies to redomesticate in North Carolina versus other jurisdictions onshore or offshore," North Carolina Insurance Commissioner Mike Causey earlier said in a statement.

North Carolina legislators made several changes to the state's captive statute in 2018. For example, lawmakers approved a measure making it clear that captives licensed in other states are exempt from North Carolina taxes, even if they do business in North Carolina.

Another measure approved last year specifies that any change a captive makes to its executive officers or directors will be automatically approved by the state insurance commissioner unless it is disapproved within 30 days after the completion of the commissioner's review of the individuals' biographical affidavits.

North Carolina is one of the largest US captive domiciles with, as of April 1, 244 captives.

May 02, 2019