The European Commission voiced strong opposition to a proposal that would impose new taxes on insurance premiums ceded to foreign affiliates of domestic insurers.
In a letter to the U.S. Treasury Department, Angelos Pangratis, acting head of the European Union's U.S. delegation, expressed concern about a provision in President Barack Obama's administration's proposed budget for 2011 that would deny U.S. tax deductions on reinsurance cessions to affiliated reinsurance companies located outside the United States.
"We believe the proposal is at odds with the principle of a level playing field for all U.S. insurers and reinsurers," according to the letter, because it would introduce a "tax regime that would penalize foreign-owned U.S. insurance companies that reinsure their risks with affiliated foreign companies."
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