Bermuda Government Proposes Legislative Amendment to Exempt Non-Tax Resident from Economic Substance Requirements

On 21 June 2019, Bermuda's House of Assembly passed a Bill entitled "The Economic Substance Amendment Bill 2019". The Bill will now be debated in the Senate and, if passed, is expected to become operative following the Governor's assent by the end of June 2019.

The Bill introduces an important exemption from the economic substance requirements that were introduced by Bermuda under the Economic Substance Act 2018 (the "ES Requirements"). If passed, entities which are registered in Bermuda and engaged in 'relevant activities' for the purpose of that Act will not be subject to ES Requirements if they can prove that they are a 'non-resident entity'.

A non-resident entity means an entity which is resident for tax purposes in a jurisdiction outside Bermuda that is not in Annex 1 to the EU list of non-cooperative jurisdictions for tax purposes (the so-called 'black list').

Non-resident entities will be required to provide sufficient evidence to the Registrar of Companies to support their tax residence in a jurisdiction outside Bermuda. In addition, the information received by the Registrar will be provided to the foreign competent authority of an EU member state or other jurisdiction where a holding entity, the ultimate parent entity, an owner or the beneficial owner of the entity is incorporated, formed, registered or resident.

Please contact Natalie Neto, Jonathan Betts or Sarah Demerling of Walkers Bermuda or your usual Walkers contact for further information.

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