In celebration of its 20th anniversary as a captive domicile, Vermont marked the occasion with passage of two important enhancements to its captive statutes. Both chambers unanimously approved the two initiatives–one a series of technical amendments to the sponsored captive provision and, the other, a one-time tax credit for new captives.
Vermont Captive Insurance Association President Lisa Ventriss said, “We always want to know that our statutes are achieving the desired outcomes, so we revisit them each year after obtaining feedback from the captive user. The icing on this year’s cake was for the legislature itself to suggest the tax credit – now that’s called rock solid support!”
Senator Cheryl Rivers, Chairman of the Senate Finance Committee, sponsored S.139, the insurance department’s miscellaneous bill. Specific to captives were several provisions that give the Commissioner of Insurance flexibility, in some cases, to waive investment code restrictions for sponsored captives, when such action is reasonably justified; and, additionally, gives the sponsored captive owner the ability to commingle investments by participants in a single sponsored captive cell. Since 1999 when Vermont’s original sponsored captive provisions were signed into law, eight new sponsored captives have been formed. These enhancements provide for greater express authority than that which was contained within the original law.
The House Commerce Committee recommended, and the Senate concurred with, an amendment that provides a one-time, nonrefundable tax credit of $5,000 applied against the aggregate taxes owed for the first taxable year for which the company has a liability. The credit is retroactive to new captives licensed from Jan. 1, 2001 through Jan. 1, 2004. In describing the motivation behind this amendment, Rep. Mark Young said, “This measure is a nice vote of confidence from the legislature to the industry; it solidifies our legislative support of captives and expresses our desire to be cooperative as we begin the next 20 years of captive domesticity.”
The bill sits on the Governor’s desk awaiting signature, which is expected within two weeks. The bill is effective upon passage.
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