The European Commission is set to reverse its decision of including the British overseas territory on a list of global tax havens after the jurisdiction amended its legislation in order to comply with EU standards.
The European Union's tax commissioner, Pierre Moscovici, said the EU Code of Conduct (Business Taxation) Group (CCG) will receive a 'positive recommendation' regarding Bermuda's request for removal from the EU blacklist of non-cooperative jurisdictions.
"On this basis, Bermuda is confident that we will be removed from the list of non-cooperative jurisdictions for tax purposes at the earliest opportunity and we look forward to continued dialogue with the commission regarding Bermuda's enhancement to its investment funds regime," the country's premier David Burt said after a meeting with the commissioner in Brussels.
Bermuda is confident that we will be removed from the list of non-cooperative jurisdictions for tax purposes at the earliest opportunity and we look forward to continued dialogue with the commission regarding Bermuda’s enhancement to its investment funds regime"
Its statement said that during the meeting, Moscovici acknowledged "the level of co-operation between the European Union and Bermuda" and "encouraged us to continue our engagement".
The 28-nation EU set up the so-called blacklist in December 2017 after revelations of widespread tax avoidance schemes used by corporations and wealthy individuals to lower tax bills.
EU governments adopted a broadened blacklist of tax havens, adding 10 jurisdictions to the updated list: Bermuda, the Dutch Caribbean island of Aruba, Barbados, Belize, Fiji, the Marshall Islands, Oman, the United Arab Emirates, Vanuatu and Dominica.
Blacklisted jurisdictions face reputational damage and stricter controls on their financial transactions with the EU, although no EU sanctions have yet been agreed by European states.
Bermuda was unexpectedly added to the list last month, on the grounds that legislation it enacted at the end of 2018 did not fully satisfy the CCG's demands for 'economic substance'. In an effort to meet a EU deadline, the self-governing island passed legislation in December that makes it compulsory for companies domiciled in Bermuda to have a "substantial economic presence," granting some firms a grace period for implementation.
Bermuda was also required to change its tax rules by the end of February, but added new loopholes in revised legislation and did not provide a final text by the deadline, according to the Commission.
Burt denied the deadline was missed and said its legislation was perceived by businesses as more stringent than other jurisdictions.
While Britain had pushed other EU states not to include Bermuda on the list, it lifted its objections after the European Commission argued that the island has "been playing games" to dodge EU requirements, according to minutes of a meeting of EU envoys on the matter.
Burt rejected that assertion, saying the impression arose due to a "technical omission which was rectified in good time."
In the meantime, Bermuda's finance minister Curtis Dickinson will continue with the European visit to hold further meetings in Berlin, Brussels, London and Paris. Talks will also continue with the European Commission regarding Bermuda's investment funds regime, which now forms the CCG's main concern.