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Insurance Europe said its main concern with the proposed PE rules is that, for some insurance business models, PEs would be recognised for tax but not for regulatory purposes, with nil or minimal additional profit being attributed to them. This would represent a disproportionate compliance burden for insurers, as well as for tax authorities.
In its response, Insurance Europe warned that while the discussion draft recognises that there will be situations in which the profits attributed to the PE will be nil, it fails to propose a solution which would avoid the disproportionate compliance burden that will be created for insurers in these cases.
In addition, Insurance Europe reiterated its position that only the presence of Key Entrepreneurial Risk-Taking functions in a jurisdiction should create a PE for tax purposes and be relevant for the attribution of profits.