Appendix II. Subject to amendment 1

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1 Appendix II High-level Overview of the ation of Unit-linked Life Insurance Policies issued to Natural Persons by EU Life Insurance Undertakings operating on a Freedom of Services Basis in certain Member States of the European Union 1 1 This table addresses the notification and withholding obligations in relation to life insurance business applicable to EU life insurance undertakings operating on a freedom of services ( FOS ) basis in a number of EU Member States. The Member States in question are the principal States in which many AILO members operate. EU life insurance undertakings operating on a branch basis in a Member State are generally subject to the same notification and withholding tax obligations as local domestic insurers and have not been included in this table. Country Requirement for insurer to appoint a fiscal representat-ive or to make direct disclosures to Authority Requirement to report premium receipts/policy issuance Austria. Premium tax is due on each premium received. Monthly report send to authorities with payment Belgium. Premium tax is due on each premium received. Requirement to report annual value Requirement to report final events (withds/surr enders/ death) Point Premium tax on Premium tax on Is there a requiremen t for interest - bearing instruments to be separately identified in the policy? Type of tax on emerging benefits, including interest and other forms of income growth relief available for specific qualifying policies ne ne Inheritance/ Gift tax due on benefits Subject to amendment 1

2 Monthly report send to authorities with payment Cyprus Stamp Duty on France. Filing of quarterly report. Submission of withholding tax returns and payment of tax liability Annual wealth tax Certificates issued. Quarterly report to tax rep detailing all new policies, surrenders, maturities and changes to exisiting policies Annual wealth tax Germany duty falls on agent 2 Ireland Every 8 years 3 Italy. Monthly reporting of premiums received Luxemburg. An annual statement of premiums paid is issued to Surrender/Withd Malta Stamp Duty on ne Income tax Income Income Netherlan Annual yield tax ne. An income tax liability is triggered on death of Subject to amendment 2

3 ds rway Annual yield tax ne Portugal. Bi-annual return and payment of parafiscal charges Parafiscal Charges on Premium Income tax on gains on surrender/withdr awal Income Spain Premium tax on risk contracts for qualifying linked contracts Annually for non qualifying linked contracts Annual wealth tax Sweden Annual yield tax. Statement of value issued to annually United Kingdom. Insurer can provide information direct to tax authority as alternative to appoint fiscal rep. Surrender/Withd. Statement of gains on surrender or withd issued to both and tax authority ne Income Subject to amendment 3

4 2 German law permits the insurer to assume notification responsibility in place of the intermediary. 3 Unit linked s are taxable on the growth within the policy every 8th policy anniversary. tes:? AILO members hold source materials (legislation, regulations and tax circulars) to support the above overview; full details available on request.? National reporting and withholding obligations should reflect certain fiscal and Single Market objectives, namely (i) FOS life insurance undertakings should be subject to the same or similar reporting and withholding obligations as domestic insurance undertakings in the host State in question, i.e. a level tax playing field ; (ii) they must, therefore, be able to offer their products to host State s with the same tax relief or benefits as those enjoyed by domestic products; and (iii) more generally, they must be able to exercise the Treaty-guaranteed freedom to provide services on terms which are nondiscriminatory, proportionate to the fiscal objective sought by the host State and not unduly restrictive (cf. Commission s Interpretative Communication on freedom to provide services and the general good in the insurance sector (OJEC, C43 of 16 February 2000, page 5);? AILO members operating on a FOS basis accept host State tax requirements as general good binding on them as soon as they commence marketing of policies on the host State territory. Such tax requirements cover direct and indirect taxes payable on taking out of the policy, during its term, on surrender and at maturity/occurrence of the insured risk. They appoint local fiscal representatives to ensure full compliance with these requirements. Alternatively, where, for example by virtue of European Court judgements, a fiscal representative is not required (e.g. premium tax in Belgium), they ensure calculation, declaration and payment of tax directly from the home State. Another option is to appoint the insurance intermediary to fulfil the requirements (e.g. in Germany).? Anti money laundering ( AML ) requirements set by EU legislation are also general good binding on AILO members. In certain jurisdictions, tax evasion can be an AML offence and so FOS insurance undertakings have due regard to the need to ensure that AML compliance extends, where necessary, to preventing tax evasion.? Certain tax benefits, exemptions, etc. are conditional on factors such as qualifying periods, for example, in France the most favourable tax relief on surrenders is available after eight years; other States tax differently, for example in Ireland, s are taxable on the growth within the policy every 8th policy anniversary;? Reporting and withholding obligations may apply to taxes other than income tax, for example premium tax in Belgium. Reporting means providing information, in accordance with the requirements and options set out in the relevant national legislation, to the national tax authority directly, for example Subject to amendment 4

5 withholding tax in France. Alternatively, the undertaking may provide information to s in order to enable them to fulfil their tax reporting obligations, for example surrender values for policies for wealth tax purposes in France? AILO members may, as insurance undertakings carrying on an activity of insurance (as opposed to first pillar coverage and to institutions for occupational retirement provision), offer certain types of pension product ( tax-enhanced pension business, retirement benefits, superannuation schemes, etc.): the above overview does not contemplate these products, since they tend to be dealt with separately under national tax laws. Subject to amendment 5