Taxes & Fees
Surplus Lines Taxes & Fees
All surplus lines insurance policies in which North Carolina is the home state, are subject to a premium tax. The only exception are policies that have qualified for an NCDOI approved tax exemption or a statutory line coverage exemption. The NCSLSO by statute, will process all surplus lines insurance filings and charge a stamping fee.
The North Carolina surplus lines tax is five percent (5%) on all taxable transactions.
This tax will apply to all premiums, company (insurer) imposed fees, and all endorsements entered in SLIP.
New & Renewal Policies:
The North Carolina surplus lines stamping fee percentage charged on the premium is based on the effective date of the policy. The stamping fee will apply to all premiums, company (insurer) imposed fees, and all endorsements entered in SLIP.
- Three-tenths of one percent (0.3%) on all new and renewal policies with an effective date on or after January 1, 2023
- Four-tenths of one percent (0.4%) on all new and renewal policies with an effective date from Jan 1, 2017 – Dec 31, 2022.
Endorsements:
The stamping fee for all endorsements, audits, installments, cancellations or return premium
transactions will be the same percentage as the inception date of the policy being endorsed.
- Example One: The stamping fee for a policy with an effective date of 10/01/2022 is 0.4% of the
total gross premium. An additional premium endorsement to this policy with an endorsement
effective date of 06/01/2023 is 0.4%. If a cancellation takes place with an effective date of
08/01/2023, the stamping fee credit is 0.4% of the returned premium. - Example Two: The stamping fee for a policy with an effective date of 01/01/2023 is 0.3% of the
total gross premium. An additional premium endorsement to the policy with an endorsement
effective date of 06/01/2023 is 0.3%. If a cancellation takes place with an effective date of
08/01/2023, the stamping fee credit is 0.3%.
Example:
| Premium: | $1000.00 |
| NC surplus lines tax (1000 x 0.05) | $50.00 |
| NC stamping fee (1000 x .003) | $3.00 |
Example:
| Premium: | $1000.00 |
| Company Fee: | $200.00 |
| NC surplus lines tax (1200 x 0.05) | $60.00 |
| NC stamping fee (1200 x .003) | $3.60 |
Company fees are taxable.
Company fees are those charged by the insurance company (insurer). The NCDOI considers all fees charged by the insurer part of the premium and subject to surplus lines tax and stamping fee.
Any fees charged and retained by the broker are not considered company fees and are not subject to surplus lines tax or the stamping fee.
There are statutory exemptions for certain types of policies under the North Carolina Surplus Lines Act. Policies that fall within one of the coverage codes with a non-taxable status (tax status codes) are not subject to surplus lines premium tax.
- All tax-exempt filings are subject to the surplus lines stamping fee, except for North Carolina state owned property.
Tax-exempt filings are to be entered in SLIP, but will not receive an approval until the NCDOI has been notified of such filing and has approved the tax-exempt status for such risk.
- File the policy in SLIP with a nontaxable tax status. SLIP will mark this as a Transaction in Question.
- The Stamping Office will ask for supporting documentation to present to the NCDOI for a decision on the tax status.
- The NCDOI will review each policy on a case by case basis for tax-exempt approval.
If North Carolina is the home state, then all premium (including foreign premium) must be declared in the tax filing. However, if the premiums can be separated (domestic vs foreign) and proof can be provided that foreign taxes were paid, then we can ask the NCDOI to make an exception.
For approval of this exception, please submit to the NCSLA a copy of the policy (declarations page), any policy forms that indicate the premium breakout, and proof of the foreign tax payments.
Note: Do not file the policy transaction in SLIP until we have the NCDOI approval for this exception.