Bermuda has recently announced an update to its economic substance requirements for non-resident entities. The update states that entities claiming an exemption from these requirements must now meet certain criteria to be considered eligible.
Entities that are resident for tax purposes in a jurisdiction outside of Bermuda must be acceptable to the Registrar of Companies, and all of their income from relevant activities must be liable to tax in that jurisdiction. Additionally, the jurisdiction in which the entity claims to be resident for tax purposes must not be on the EU’s list of non-cooperative jurisdictions for tax purposes. If an entity wishes to rely on this exemption, it must make a submission to the Registrar on an annual basis. The submission must provide sufficient evidence to support the claim of residency for tax purposes in the relevant jurisdiction.
As per the Economic Substance Guidance Notes, last revised on 30 January 2023, the Registrar will no longer accept an exemption claim from entities resident for tax purposes in a jurisdiction that does not have a corporate tax regime. Residency for tax purposes in such a jurisdiction should result in the entity being subject to equivalent economic substance requirements in that jurisdiction. This means that some of the jurisdictions that may be rejected by the Registrar in connection with an exemption application include Anguilla, Bahamas, Bahrain, Barbados, and the United Arab Emirates.
Bermuda entities currently claiming an exemption from a restricted jurisdiction should carefully consider their activities and ensure they can continue to adhere to the economic substance regime. If you have any questions regarding the application of the economic substance requirements to your business, please do not hesitate to contact your usual Marbury advisor or info@marburys.com.