Today, the IRS issued Revenue Ruling 2016-3, which revokes Revenue Ruling 2008-15, in view of the decision of the US Court of Appeals for the District of Columbia in the case ofValidus Reinsurance, Ltd. v. United States, 786 F.3d 1039 (D.C. Cir. 2015). As a result, the IRS will no longer apply the one-percent excise tax imposed by section 4371(3) to premiums paid on a policy of reinsurance issued by one foreign reinsurer to another foreign insurer or reinsurer under the situations described in Rev. Rul. 2008-15. In Validus, the court, applying the presumption against extraterritoriality, held that the excise tax under section 4371 did not apply to reinsurance policies purchased by one foreign reinsurance company from another foreign reinsurance company.
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IRS Will No Longer Apply Excise Tax to Certain Purely Foreign Retrocessions
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