Bermuda added as EU tax haven, but government says listing is ‘temporary’

Bermuda has been added to a European Union list of “non-cooperative” jurisdictions, although the Bermuda Government insists that the listing will be temporary, and was due to a technical omission in its submission to the EU. The Council of the European Union adopted a revised EU list of non-cooperative jurisdictions for tax purposes. In addition to the five jurisdictions that were already listed, the list now includes: Aruba, Barbados, Belize, Bermuda, Dominica, Fiji, Marshall Islands, Oman, United Arab Emirates and Vanuatu. The council said these jurisdictions did not implement the commitments they had made to the EU by the agreed deadline. The list is intended to contribute to ongoing efforts to prevent tax avoidance and promote good tax governance worldwide. Eugen Teodorovici, minister for finance of Romania, said: “Since it was first adopted in late 2017, the list has proven its worth in promoting forward in a cooperative manner the EU's agenda of improving global tax practices, fighting tax avoidance and improving good governance and transparency: more than 30 jurisdictions have already delivered on their commitment to pass tax reforms.” The council stressed that the work on the EU list of non-cooperative jurisdictions is a dynamic process, and it will continue to regularly review and update the list in the coming years, taking into consideration the evolving deadlines for jurisdictions to deliver on their commitments. It said Bermuda was added because: “Bermuda facilitates offshore structures and arrangements aimed at attracting profits without real economic substance and has not yet resolved this issue. Bermuda's commitment to addressing the concerns relating to economic substance in the area of collective investment funds by the end of 2019 will be monitored.” The council said Barbados was added to the list because: “Barbados has replaced a harmful preferential tax regime by a measure of similar effect and did not commit to amend or abolish it by the end of 2019.” The council also noted that the Bahamas, British Virgin Islands and Cayman Islands have committed to addressing the concerns relating to economic substance in the area of collective investment funds, and have engaged in “a positive dialogue with the group and have remained cooperative, but require further technical guidance”, and have been granted until the end of 2019 to adapt their legislation. The response from Bermuda The Bermuda Government was unsurprisingly disappointed with the listing, with the Premier, David Burt calling it a “setback". He added: “Bermuda is compliant and we are confident that within a matter of weeks, that will be accepted by EU member states and Bermuda will be removed from this list. This confidence is shared by the UK Government, [which] through the Treasury specifically stated ‘that Bermuda has legislated to address the issue identified’‎[and] in light of this we expect Bermuda, and other compliant jurisdictions, to be removed from the list at the next available opportunity’.” Curtis Dickinson, Bermuda’s minister of finance, said the UK Treasury “has advised us that the UK will submit its minutes of the ECOFIN meeting to articulate the UK’s view that Bermuda's last submission to the commission on 4 March 2019 satisfies the one remaining issue that had been identified”. He added: “The UK’s communique makes clear their expectation that Bermuda should be delisted at the next ECOFIN in May, as there is no April ECOFIN.” He noted that the UK Government had said it expects Bermuda, and other compliant jurisdictions, to be removed from the list at the next available opportunity. He explained that the reason for the listing was a technical omission from their submission to the EU Commission in February. This submission was made in good time, and as soon as the error was flagged, “we proactively sent a 4 March 2019 revision to address any possible lingering concern and it was circulated by the commission to the EU member states in good time prior to the member states tax envoys meeting of 8 March, 2019”, said Mr Dickinson. However, he noted that some press reports claim that the member states’ tax envoys’ meeting of 8 March 2019 did not fully consider Bermuda’s 4 March 2019 revision when making their recommendations. He said it was disappointing that a minor technical omission in regulations was addressed too late for it to be considered, given the ECOFIN meeting was on 12 March 2019 and the amending submission was made on 4 March 2019. He added that Bermuda fully expects to be removed from the list on or before the next ECOFIN meeting. John Huff, president and CEO of the Association of Bermuda Insurers & Reinsurers (ABIR), said: “We have every hope that the EU determination will prove temporary. While ABIR understands there is no immediate tangible impact to Bermuda or its markets, we are appreciative of the Bermuda Government’s commitment to remedy the designation as soon as possible. There is bipartisan and industry consensus in Bermuda to meet international standards.” Kathleen Bibbings, president of the Bermuda Insurance Management Association, said: “Bermuda’s captive insurance sector, like other industry partners throughout our market, has a long, proven track record of cooperation and transparency, and as a jurisdiction we’ll work with the EU to meet requirements. We remain confident that Bermuda’s full compliance will be confirmed shortly.”

Bermuda added as EU tax haven, but government says listing is ‘temporary’

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