• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar

Reinsurance Focus

New reinsurance-related and arbitration developments from Carlton Fields

  • About
    • Events
  • Articles
    • Treaty Tips
    • Special Focus
    • Market
  • Contact
  • Exclusive Content
    • Blog Staff Picks
    • Cat Risks
    • Regulatory Modernization
    • Webinars
  • Subscribe
You are here: Home / Reinsurance Regulation / FLORIDA DEPARTMENT OF REVENUE ISSUES ADVISEMENT DETERMINING THAT A REINSURER AND ITS CEDENTS DID NOT HAVE NEXUS IN FLORIDA FOR TAX PURPOSES

FLORIDA DEPARTMENT OF REVENUE ISSUES ADVISEMENT DETERMINING THAT A REINSURER AND ITS CEDENTS DID NOT HAVE NEXUS IN FLORIDA FOR TAX PURPOSES

March 13, 2017 by Michael Wolgin

On January 13, 2017, the Florida Department of Revenue issued a Technical Assistance Advisement regarding whether a reinsurer had nexus with the state of Florida that would require it to file a corporate income tax return and whether the Florida activities of the reinsurer’s ceding companies made Florida the location of the reinsurer’s and cedents’ regional home office. As to both questions, the DOR answered in the negative.

First, the DOR concluded that the reinsurer did not have nexus with the state because the reinsurer was not an approved reinsurer registered with the Florida Office of Insurance Regulation, and the reinsurer did not reinsure policies of insurers that were domiciled or commercially domiciled in Florida. Next, the DOR found that the ceding companies did not have a regional home office in Florida because – even though the ceding companies performed in Florida many activities traditionally carried out in a regional home office, such as selling insurance or approving or rejecting coverage, Florida was not the domicile or nerve center of the ceding companies.

Recognizing the term “regional home office” to have no definition, the DOR looked to the Department’s previous definition of the residence of a corporation as (1) a corporation’s domicile, or (2) with respect to diversity jurisdiction, “as the nerve center of the corporation”. The DOR then found that this standard was not met. The ceding companies’ “activities are not performed entirely for three states, or two states and one or more foreign countries … less than 5% of the ceding insurer’s underwriters are located in Florida … all national advertising [ ] is handled outside Florida … [and] the Florida office location only performs activities authorized by the home office.” In reaching this conclusion, the DOR further recognized as important the strict construction of taxing statutes in favor of the taxpayer. Florida Dept. of Revenue Technical Assistance Advisement – 17C1-001 (Jan. 13, 2017).

This post written by Brooke L. French.

See our disclaimer.

Share
Share on Google Plus
Share
Share on Facebook
Share
Share this
Share
Share on LinkedIn

Filed Under: Reinsurance Regulation, Week's Best Posts

Primary Sidebar

Carlton Fields Logo

A blog focused on reinsurance and arbitration law and practice by the attorneys of Carlton Fields.

Focused Topics

Hot Topics

Read the results of Artemis’ latest survey of reinsurance market professionals concerning the state of the market and their intentions for 2019.

Recent Updates

Market (1/27/2019)
Articles (1/2/2019)

See our advanced search tips.

Subscribe

If you would like to receive updates to Reinsurance Focus® by email, visit our Subscription page.
© 2008–2025 Carlton Fields, P.A. · Carlton Fields practices law in California as Carlton Fields, LLP · Disclaimers and Conditions of Use

Reinsurance Focus® is a registered service mark of Carlton Fields. All Rights Reserved.

Please send comments and questions to the Reinsurance Focus Administrators

Carlton Fields publications should not be construed as legal advice on any specific facts or circumstances. The contents are intended for general information and educational purposes only, and should not be relied on as if it were advice about a particular fact situation. The distribution of this publication is not intended to create, and receipt of it does not constitute, an attorney-client relationship with Carlton Fields. This publication may not be quoted or referred to in any other publication or proceeding without the prior written consent of the firm, to be given or withheld at our discretion. To request reprint permission for any of our publications, please contact us. The views set forth herein are the personal views of the author and do not necessarily reflect those of the firm. This site may contain hypertext links to information created and maintained by other entities. Carlton Fields does not control or guarantee the accuracy or completeness of this outside information, nor is the inclusion of a link to be intended as an endorsement of those outside sites. This site may be considered attorney advertising in some jurisdictions.