Tax Facts

8180 / Can a foreign captive avoid excise taxes and elect to be taxed as a domestic insurance company?

A foreign captive can avoid the excise taxes imposed on foreign insurance premiums, as well as certain reporting requirements, if it elects to be taxed as a U.S. insurance company.1 This is known as a Section 953(d) election. Upon making this election, the foreign captive is treated as though it has transferred all of its assets to a domestic captive in connection with an exchange to which IRC Section 354 applies.2

Once the Section 953(d) election has been made, it can be revoked only with IRS consent.3

1. IRC § 953(d).

2. IRC § 953(d)(4).

3. IRC § 953(d)(2)(A).

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