The European Union has announced that, with effect from 12 March 2019, Bermuda has been added to the list of non-cooperative jurisdictions for tax purposes.
Bermuda has enacted the Economic Substance Act 2018 and the Economic Substance Regulations 2018, which came into force with effect from 1 January 2019. The Bermuda Government has advised that Bermuda's inclusion on the list was as a result of a technical failure to address an issue identified by the required deadline, rather than as a result of its adverse assessment of the legislation that is now in force.
The UK Government, through HM Treasury, has confirmed its understanding that Bermuda has legislated to address the issue and that it expects Bermuda to be removed from the list at the next available opportunity. We understand that Bermuda is working towards being, and expects to be, removed from the list as early as May 2019 (when the next meeting of the EU's Economic and Financial Affairs Council will be held). In the meantime, the Bermuda Government has stated that 'it does not anticipate any sanctions" will be imposed upon Bermuda by the EU.
We are continuously monitoring the situation and will advise further in the event of any updates. Please contact Jonathan Betts, Natalie Neto, Sarah Demerling or any other member of Walkers Bermuda for more information on the above and the implications of Bermuda's economic substance legislation.
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