The EU has removed the Caribbean islands of Bermuda, Aruba and Barbados from its tax haven blacklist as they have committed to meeting EU tax standards and are now part of a ‘grey list’ of jurisdictions being monitored by the EU.
Bermuda has amended its legislation to comply with EU standards and enhanced its investment funds regime. It was added to the blacklist in March 2019, because the legislation it had enacted at the end of 2018 did not fully satisfy the EU demands for ‘economic substance‘. In order to comply with the EU concerns, Bermuda passed the legislation that makes it compulsory for companies domiciled in the island to have a “substantial economic presence“.
Thus, the EU blacklist now consists of 12 jurisdictions (Belize, Fiji, the Marshall Islands, Vanuatu, Dominica, American Samoa, Trinidad and Tobago, the United Arab Emirates, Oman, Samoa, Guam, and the US Virgin Islands). Although no EU sanctions have been agreed by the EU, blacklisted jurisdictions face reputational damage and stricter controls on their financial transactions with the EU.