Tax ruling to boost reinsurer's 2010 net income
Hannover Re has received €100m windfall following a ruling by Germany’s Federal Fiscal Court.
A legal dispute had arisen about whether investment income generated by a German reinsurer's Ireland-domiciled subsidiary should be taxed at the parent company level in Germany because the parent had effectively outsourced business operations to a group-owned entity in Ireland.
Hannover Re had set aside sufficient provisions to meet additional taxation stemming from investment income from its Irish subsidiaries pending the decision. However, following the court's decision, the provisions will no longer be needed and wil be released.
The release will boost Hannover Re's third quarter and full-year 2010 net income by about €100m.