In common with other cooperative jurisdictions, including Australia and Switzerland, Bermuda has now been placed on a list of jurisdictions which, in the words of the EU, “have taken many positive steps to comply with the requirements under the EU listing process, but should complete this work by the end of 2019, to avoid being blacklisted next year”. This list is referred to by the EU as a “greylist”.

What does the greylisting mean?

Inclusion on the greylist means that Bermuda is considered to be cooperative and is not subject to any sanctions.

What was the rationale for the greylisting?

The EU has stated that Bermuda, along with the Cayman Islands and BVI, requires “further technical guidance” in relation to addressing economic substance concerns in the area of collective investment funds.  It is understood that the EU is currently in dialogue with Bermuda so as to clarify those requirements in order for them to be addressed (if necessary, by amending legislation) by the end of 2019.

Next steps?

The Economic Substance Act and the Economic Substance Regulations became operative on 31 December 2018 and the compliance deadline for existing entities remains 1 July 2019. Clients with Bermuda entities need to assess their structures and identify any potential compliance challenges.

All Bermuda companies, LLCs and partnerships (which have elected to have separate legal personality) are potentially within scope of this legislation if they are conducting a “relevant activity”. The relevant activities are banking; insurance; fund management; financing;  leasing; headquarters; shipping; distribution and service centers; holding entity; and intellectual property.

An in-scope entity will be required to satisfy economic substance requirements by demonstrating that (i) it is managed and directed in Bermuda; (ii) the core income generating activities are undertaken in Bermuda with respect to the relevant activity; (iii) it maintains adequate physical premises in Bermuda; (iv) there are adequate full time employees in Bermuda with suitable qualifications; and (v) there is adequate operating expenditure incurred in Bermuda in relation to the relevant activity.

Appleby has the specialized knowledge and in-depth understanding needed to navigate the economic substance regime.  If you would like more information on ways in which we can assist you, please contact Sally Penrose or Tim Faries.

Type

Insight

Sectors

Economic Substance

Locations

Bermuda

Share
Twitter LinkedIn Email Save as PDF
More Publications
1 Sep 2021 |

Changes to rules on Permanent Residency Certificates

The Ministry of Labour has recently issued a policy paper, ‘Securing Permanency for Long-Term Resi...

26 Aug 2021 |

What to remember when an employee leaves

Just as when a new recruit is on-boarded, there are a variety of tasks an employer needs to deal wit...

23 Aug 2021 |

BMA seeks more seamless marketplace with ILS process enhancements

Recent changes made by the Bermuda Monetary Authority (BMA) to improve processes specific for catast...

17 Aug 2021 |

ILS Bermuda Executive Roundtable 2021

Despite the impacts of the Covid-19 pandemic and subsequent restrictions on travel and face-to-face ...

13 Aug 2021 |

A digital asset future: closer than we think

Most of us at some point in our lives have participated in a rewards programme either at our favouri...

26 Jul 2021 |

What not to forget when an employee leaves

There are many practical and ‘housekeeping’ matters that employers need to deal with when an emp...

Contributors: Jordan Knight
23 Jul 2021 |

Contributed surplus: it’s not capital!

Last week, in part one, we discussed the meaning of share premium, the various ways a company may us...

16 Jul 2021 |

Share premium: do you have it?

When the issuance of shares by a company is discussed, the first thought that comes to mind is the s...

2 Jul 2021 |

No question you’ll see more life reinsurers in Bermuda

While the emergence of property and casualty (P&C) startups in Bermuda is likely to be muted in ...

2 Jul 2021 |

Bermuda: An introduction to Dispute Resolution

This edition discusses Current Economic Conditions and Dispute Resolution Activity, Trends & Dev...

Contributors: Jordan Knight