(1) The Principal Act is amended in Chapter 6 of Part 4 by inserting the following section after section 81A:

 "81B.

(1) In this section -

' Reinsurance Regulations ' means the European Communities (Reinsurance) Regulations 2006 (S.I. No. 380 of 2006);

' relevant rules ' means the rules as set out in point D, as inserted by Council Directive 87/343/EEC of 22 June 1987, to the Annex to the First Council Directive 73/239/EEC of 24 July 1973.

(2) Subject to the following provisions of this section, full account shall be taken of all amounts in accordance with the rules in subsection (3) in making any computation, for the purposes of Case I of Schedule D, of the profits or losses for any accounting period of an insurance company whose business has at any time been or included business in respect of which it was required, by virtue of Regulation 24 of the Reinsurance Regulations, to establish and maintain an equalisation reserve.

(3) The rules specified in this subsection are -

(a) amounts which, in accordance with the relevant rules, are transferred into the equalisation reserve in respect of the company's business in a period are to be deductible in that period,

(b) amounts which, in accordance with the relevant rules, are transferred out of the reserve in respect of the company's business in a period are to be treated as receipts of that business in that period, and