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If you pay insurance premiums to an overseas insurer, then you may have a New Zealand tax obligation on behalf of the overseas insurer.
When an insured party in New Zealand pays a premium (including a reinsurance premium) to an overseas insurer, and that insurer does not have a branch in New Zealand, the insured party is considered to be the insurer’s agent. They are required to file an annual income tax return as agent for the foreign insurer – unless the foreign insurer or person acting on their behalf has already filed a return. Ten percent of the premium is treated as taxable income, which is then taxed at the corporate tax rate (28%).
Guarantee fees paid by a New Zealand subsidiary to a non-resident parent company are also captured in this ‘agent for foreign insurer’ regime.
The responsibility for filing the income tax return, and paying the income tax, lies with the party paying the premium.
If the overseas insurer is resident in Switzerland the ‘agent for foreign insurer’ regime does not apply as Swiss insurers are not subject to tax in New Zealand under the Double Tax Agreement. However a disclosure is still required.
If the ‘agent for foreign insurer’ regime applies, the party paying the premium will need to apply for an ‘as agent’ IRD number and file an income tax return (IR1215) each year, in line with the usual tax filing deadlines.
If you are paying premiums to an overseas insurer, incurring guarantee fees from a non-resident parent company, or being recharged insurance premiums from a related party, please get in touch to ensure you are meeting your compliance obligations.
Please contact your Nexia advisor for further information, or you can get in touch via our our general contact details here.