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
3 Jun 2021 |

Virtual Currency in Bermuda: An Update

Bermuda has come a long way in the virtual currency sphere.

25 May 2021 |

Changes to the rules on Bermuda status for children

The Government of Bermuda has recently introduced changes to assist with the process of verifying an...

17 May 2021 |

Maintaining a robust profile at the top of multiple sectors

This Country Report provides the latest update on how Bermuda is positioning itself as the perfect b...

13 May 2021 |

Bermuda: Mergers & Acquisitions Comparative Guide

This country-specific Q&A provides an overview to Mergers & Acquisitions laws and regulati...

Contributors: Riley O’Brien
6 May 2021 |

Blue chip Bermuda welcomes green investment

In 2019, the “underwriting nature” initiative led by Swiss Re culminated in the first ever coral...

23 Apr 2021 |

Changes to the Employment Act 2000 – Part 5

This is the fifth and final part of our series of articles on the amendments to the Employment Act 2...

15 Apr 2021 |

6 months on: Temporary relocation and residency by investment continues to increase in popularity

Six months on from the new digital nomad programmes, did the predicted upward trend reflect the real...

8 Apr 2021 |

Doing business from and within our shores

Bermuda is a hub for international business, which is one of the top contributors to our economy and...

25 Mar 2021 |

Changes to the Employment Act 2000 – Part 4

This Article is Part 4 of our series on the amendments to the Employment Act 2000 (“Act”) that w...

25 Mar 2021 |

Full Steam Ahead at the Jersey Ships Registry

Against a backdrop of uncertainty surrounding Brexit and the difficulties created by the global pand...