Georgia passes historic captive bill

The Georgia legislature has passed HB 552, a bill that centres on changes in the tax structure for captive insurance companies domiciled in the state.

The bill will reduce the premium tax rate for captive insurance companies to 0.4 percent for the first $20 million, with a 0.3 percent tax rate thereafter. The bill also lowers the aggregate maximum premium tax to $100,000 and clarifies that when two or more captive insurance companies are under common ownership, they can be taxed as a single company.

“Passage of HB 552 will take Georgia from a historically unfriendly jurisdiction for licensing captive insurance companies to a competitive player in this arena,” said Alana Mueller, senior manager at Bennett Thrasher and president of the Georgia Captive Insurance Organisation.

“Roughly nine in ten Fortune 1,000 companies have captives, which typically favour the state in which the company is headquartered, assuming the state has favourable captive laws in place. Whereas other states have offered competitive tax incentives for captives, until HB 552’s passage, Georgia has had a high premium tax rate on captives, and we are glad to see this rate reduced.”

The bill’s passage is expected to impact numerous businesses in the state, and bring additional captive insurance companies to Georgia.