US institutional shareholders that buy into the upcoming float of Standard
Life could face hefty tax bills because of uncertainty over the life insurer’s
tax status in the US.
In its IPO prospectus, Standard Life warned that it could be classified as a
passive foreign investment company (PFIC) under US regulations, which would see
US shareholders forced to pay higher taxes and interest charges on the profits
or distributions gained from Standard Life shares.
Under US tax rules, a PFIC is a company that generates 75% of its income from
dividends, interest or royalties, or holds 50% of its assets for producing
The rules do provide exceptions for non-US insurance companies like Standard
Life led by chief executive Sady Crombie, (pictured left), but the group warned
that the scope of these exceptions was unclear and that it could be classified
as a PFIC for any taxable year.
A Standard Life spokesman said the company would be marketing the IPO to US
institutions: ‘We have no policyholders in the US and are aiming for 70% to 80%
of the offer to come from retail shareholders,’ he said. ‘We will be marketing
to institutional shareholders, some of which may be in the US.’
For more on Standard Life’s IPO, go to
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