Bermuda Concludes Negotiations of a Tax Information Agreement with Spain; Significant Benefits Gained for Industry
HAMILTON, Bermuda – Bermuda’s Minister of Finance the Hon. Paula A. Cox announced today that Bermuda concluded negotiations of a bilateral agreement with Spain that provide for a full exchange of information on criminal and civil tax matters between Bermuda and the Kingdom of Spain. Significant benefits were accrued for Bermuda including an exemption from 30% corporate tax rate on Spanish income earned on investment in Bermuda.
Negotiations took place September 28-29 in Madrid, Spain, at the Ministry of Economy and Finance. Bermuda’s negotiating team including Assistant Financial Secretary, Mr. Wayne Brown, and Acting Deputy Solicitor-General, Mr. Huw Shepheard.
Bermuda’s negotiating team secured, which will apply upon signing the TIEA, release from Spain’s list of uncooperative jurisdictions (outlined in the First Additional Provision of the Spanish Law to Avoid Tax Evasion). A significant benefit accrued by the TIEA is that any Spanish corporation investing 5% or more in a Bermuda entity shall be exempt from Spain’s 30% corporate tax rate on income such Spanish corporation receives from its investment in Bermuda, provided its investment in the Bermuda entity has been for more that one year. Therefore, Spanish companies currently investing in Bermuda for more than one year will receive the exemption from the Spanish tax from day one of the coming into effect of the TIEA.
This provides a major incentive to Spanish companies establishing Bermuda captive insurance companies and investment vehicles, thus boosting international business in Bermuda and the associated income such business that generates in the Bermuda economy.
In addition to the TIEA, Bermuda holds considerable allure for international companies within Spain looking to establish in new markets. Bermuda received international recognition in June for being the first country to ascend to the OECD white list from the grey list, and in September Bermuda was elected a Vice Chair of the Steering Group of the new OECD Global Forum, the only non-OECD country of the Chair and Vice Chairs of the Steering Group of the Global Forum. Spain, like other TIEA partners, extended its praise to Bermuda for these achievements.
Bradley Kading, President and Executive Director of the Association of Business Insurers and Reinsurers (ABIR), praised today’s development: “The Ministry has done an excellent job in demonstrating Bermuda’s commitment to the OECD and G 20 international tax compliance standard. Bermuda’s insurers in ABIR’s membership write approximately 11% of the broker placed reinsurance for Spanish insurers. Spain has been a growing market in Europe and Spain is home to one of the world’s largest reinsurance corporations. It’s a natural place for Bermuda’s insurers to do additional business in the future.”
The Spanish TIEA is expected to be signed by end of year, it is hoped in Bermuda as Minister Cox has extended an invitation to Spain’s Minister to sign the Agreement in Bermuda. Currently, Bermuda has fifteen signed tax information exchange agreements (TIEAs), substantially demonstrating Bermuda’s commitment to implement the internationally agreed tax standard.
