Bermuda removed from EU tax blacklist, but remains on ‘grey’ list

Bermuda’s (re)insurance and risk community breathed a collective sigh of relief after the country was removed from the European Union’s tax blacklist, but it remains on a ‘grey’ list until concerns are fully addressed. On Friday, the EU’s Economic & Financial Affairs Council (ECOFIN) said Bermuda, along with Aruba and Barbados, will be removed from a list of non-cooperative tax jurisdictions, where it has sat since 12 March. ECOFIN said Bermuda has implemented commitments to ease EU concerns and done enough to be removed the blacklist. However, it said Bermuda would be shifted to annex II – also known as the ‘grey’ list – until it addresses remaining issues over collective investment funds. Annex II houses jurisdictions that have committed to reforming their tax policies. Barbados will join Bermuda on the annex II list, while Aruba has been removed completely after meeting all requirements. Bermuda said it will work towards resolving the annex II status by the end of the year. In a statement, Bermuda minister of finance Curtis Dickinson said the last few months had been a “difficult period”. “Bermuda has now been placed on the ‘grey’ list, meaning being placed in annex II of the EU list. This reflects the need to further expand our legislative framework in this area, to include the EU’s economic substance requirements for collective investment funds,” Mr Dickinson said. Bermuda’s government, regulator and business have worked in cooperation to clear up tax issues and amend its status. Government and business said they were “disappointed” by Bermuda’s inclusion on the EU blacklist after working hard to ensure the island met all international fiscal and regulatory requirements. Bermuda is a leading offshore financial services centre and global centre of (re)insurance. According to Bermuda’s authorities, the island’s inclusion was the result of an administrative oversight that led to a delay in part of its submission to the EU’s Code of Conduct Group on Business Taxation. Albert Benchimol, chair of the Association of Bermuda Insurers & Reinsurers, said the Bermuda Government’s quick response had proved the country’s commitment to international tax standards. Ronnie Klein of Bermuda International Long Term Insurers and Reinsurers (BILTIR), said Bermuda is an insurance-friendly jurisdiction that has met Solvency II standards. “While being placed on ECOFIN’s list of non-cooperative tax jurisdictions was disappointing, BILTIR members were confident Bermuda would be removed from the list at the earliest opportunity. We are confident our government officials will continue to work with the EU to meet all compliance standards, demonstrating Bermuda’s longstanding reputation for transparency and regulatory leadership,” he said. Stephen Weinstein, deputy chair of the Bermuda Business Development Agency (BDA), said: “Our jurisdiction’s updated regulatory and legislative framework mirrors existing practices in our international business market, exemplifying the highest standards of compliance and economic substance. It’s important that markets worldwide have access to Bermuda’s leading expertise and capacity.” The BDA’s CEO Andy Burrows added: “Today’s decision is the right one, and we welcome it as a testament to the top-tier reputation we’ve worked hard to build over many decades. We thank the government for its proactive response, as well as the regulator and all our industry stakeholders.” The EU’s list of non-cooperative tax jurisdictions was first set up in December 2017 to “prevent tax avoidance and promote good governance principles such as tax transparency, fair taxation or international standards against tax base erosion and profit shifting”. Bermuda, Aruba and Barbados were added to the 15-strong list in March after ECOFIN reviewed implementation of commitments by third-country jurisdictions. The remaining countries on the EU’s list include: American Samoa, Belize, Dominica, Fiji, Guam, Marshall Islands, Oman, Samoa, Trinidad and Tobago, United Arab Emirates, US Virgin Islands and Vanuatu. ECOFIN said it would continually review and revise the list this year, with “a more stable process” in place from 2020. Mr Dickinson said the Bermuda Government and experts from the collective investment fund industry are already working with the EU to resolve the remaining issues. “They will continue to cooperate with the EU with respect to the adoption, by the end of this year, of an economic substance framework for CIVs that is acceptable to the EU,” Mr Dickinson said.

Bermuda removed from EU tax blacklist, but remains on ‘grey’ list

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