Report 2011 - EFTA Court

2 The parties disagree whether the special provisions of
Liechtenstein law regarding the taxation of captive insurance
companies constitute State aid under Article 61(1) of the EEA
Agreement (“EEA”). it is also disputed whether and to what
extent legitimate expectations entertained by the beneficiaries
of the alleged State aid prevent recovery of State aid granted
prior to the final decision of ESA on 24 March 2010. Further,
the applicants argue that ESA’s Decision infringes the principles
of legal certainty, homogeneity and equal treatment, and that it
lacks adequate reasoning.
3 Under point 7 of Article 11(1) of the insurance Supervision
Act, “captive reinsurance undertaking” means “a reinsurance
undertaking owned either by an undertaking in the financial
sector other than an insurance undertaking or a group of
insurance undertakings within the meaning of Article 7 of
the Act, or by an undertaking not in the financial sector, the
purpose of which is to provide reinsurance cover exclusively for
the risks of the undertaking or undertakings to which it belongs
or of an undertaking or undertakings of the group of which
it is a member”. Article 6(1) of the same Act stipulates that
“self-insurance (captive)” may be provided as direct insurance
or reinsurance. Further, according to Article 6(2), insurance
companies may provide both self-insurance and insurance of third
parties, with Article 6(3) setting out the possibility of supervision
being exempted on an individual basis in accordance with Article
2(2) of the Act.
4 The tax provisions applicable to those insurance companies
(“captive insurance companies” or “captives”) were introduced in
the Tax Act in 1997 with effect from 1 January 1998. According
to those provisions, captive insurance companies pay a capital
tax of 0.1% on their own capital. For capital exceeding CHF 50
million the tax rate is reduced to 0.075% and for capital in excess
of CHF 100 million to 0.05%. in addition to paying lower amounts
of capital tax, captive insurance companies are also exempt from
the obligation to pay coupon tax.
Joined Cases E-4/10, E-6/10 and E-7/10 Principality of Liechtenstein, Reassur Aktiengesellschaft,
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Swisscom RE Aktiengesellschaft v EFTA Surveillance Authority