London Transport Insurance (Guernsey) Limited

Meeting: 
MQT on 2014-10-22
Session date: 
October 22, 2014
Reference: 
2014/3607
Question By: 
Stephen Knight
Organisation: 
Liberal Democrats
Asked Of: 
The Mayor
Category: 

Question

Further to your answer to MQ2014/3109 - in which you stated that the costs of relocating Transport for London's insurance subsidiary would be considerable - can you clarify the additional costs Transport for London (TfL) would face if the company were brought on-shore and regulated by the UK Government?   

Answer

Answer for London Transport Insurance (Guernsey) Limited

Answer for London Transport Insurance (Guernsey) Limited

Answered By: 
The Mayor

We set out below a comparison between the costs of establishing and running a captive in Guernsey, which is not subject to EU regulation, and one in Malta, where EU regulation applies.

It is difficult to compare the costs with those for the UK, as very few captives are domiciled in UK, and there is therefore no equivalent regime for companies insuring only in-house risks. What we can say is that the cost of running an insurance company in the UK would be very considerably higher even than for Malta, as the company would be subject to the regime governing commercial insurance companies, and much more onerous reporting requirements, requiring many hours of work.

The key differences are:

                                                        Guernsey                                          Malta

Minimum capital                            £100K                                                        EUR 1.2M (£960K)

required

Indicative set up                            £10.6K                                                      EUR 22.25K (£17.8K)

Cost

Indicative annual                            £65K                                                        EUR 105.5K (£84K)

Cost

Corporate Tax                                        0%                                                        35% maximum*.

*There is a flexible tax system that allows for a tax credit to parent of captive up to maximum of 6/7ths. Therefore it is possible to achieve effective net rate of 5%, or possible to settle on higher rate say 10% or 15% if preferable. This recognises that the parent company will pay tax on the captive's profits at the rate set by the country in which the parent is domiciled, and is intended to prevent double taxation, while allowing for some tax to be levied locally.