Tax advantages for captive insurance operations that relocate to Sweden have led Willis Group Holdings to establish a Stockholm unit providing captive advice and management, a company official said.
The new operation, Willis Management (Stockholm) AB, is an addition to the firm's global captive practice.
Martin Atterby, managing director of Willis Management in Stockholm, told National Underwriter that an increasing number of Swedish companies that established captives in other domiciles are now relocating to Sweden largely because of the tax effects of Controlled Foreign Company, or CFC regulations.
Those regulations are being adopted by essentially all countries belonging to the Organization for Economic Co-operation and Development (OECD)–made up of 30 countries, including the United States.
CFC regulations, Mr. Atterby said, penalize subsidiaries in tax havens, giving them no tax advantage to form a captive in another domicile. He noted that about 10 Swedish companies have re-domiciled to Sweden, including Ericsson and Volvo, which moved their captives from Dublin to Sweden.
He said that Sweden as a captive domicile is "particularly relevant for a U.S. company with property and personnel in several European countries and where consideration has to be taken for CFC regulations–where a low-tax domicile for the captive is not practical."
For such a company, he said, Sweden offers a low "normal" tax rate of 28 percent. The domicile also offers generous reservations which lower declared profits, and direct writing–negating the need for local fronting companies–to all member countries of the growing European Union.
Mr. Atterby pointed out that the EU is a larger economy than the U.S., both in Gross Domestic Product and population. "So the ability to access that whole market, from one point, is extremely valuable."
He added, "From this perspective, you can see Sweden as the gateway to Europe, and we have the financial and regulatory infrastructure to efficiently play that role."
As part of the Global Captive Practice, Willis Management (Stockholm) AB said it will have access to the experience and knowledge of its 130-strong international team.
Besides being able to offer advice to Scandinavian clients with captives in Sweden or abroad, the new division will also cater to the needs of Swedish captives held by foreign owners.
Willis said the services in analysis/consultancy and captive management can be offered as separate or additional services, or symbiotically with broker services to further lower the cost of risk of Willis clients.
F?rs?kringsmatematik AB ("Insurance Mathematics"), an actuarial firm with strong captive expertise, will act as subcontractor to Willis Management (Stockholm) AB and will provide complementary services.
Malcolm Cutts-Watson, leader of the Willis European Captive Practice, said in a statement that the company sees "exciting opportunities in Sweden both for domestic captive business and for foreign organizations seeking a reputable onshore location with accredited regulatory and tax regimes to base their captives."
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