‘Imperative’ Bermuda Have Contacts With France

June 27, 2014

Following his recent visit to Paris and Brussels, Finance Minister Bob Richards said that the meetings were “beneficial as we were able to dispel many misconceptions the French officials had about Bermuda.”

“However, nothing that we said really changed their minds that Bermuda was “Un paradis fiscale” – a tax haven,” added the Minister, who said it was “imperative that the Bermuda Government forges its own contacts and relationships with French authorities.”

Speaking in the House of Assembly today [June 27], Minister Richards said, “Members will recall that France black listed Bermuda as an uncooperative jurisdiction last year. Such a black listing imposed a 75% withholding tax on all money transfers from France to Bermuda.

“Although we have subsequently been removed from that black-list, it was thought beneficial that contact be made with certain senior members of the French government.”

The Minister said that while in Paris, accompanied by the representative in Brussels Alastair Sutton, he visited with officers of all three branches of the Government of France.

Minister Richards said, “These meetings were very beneficial as we were able to dispel many misconceptions the French officials had about Bermuda, our tax system, our government structure, and our constitutional status.

“However, nothing that we said really changed their minds that Bermuda was “Un paradis fiscale,” – a tax haven.

“There was limited appreciation of the size and importance of Bermuda’s reinsurance industry, although Bermuda has covered and paid claims for some major disasters in France.

“French officials uniformly expressed concern about large multinational corporations conducting business in their country and not paying their “fair share” of taxes in France. Many such corporations have holding companies in Bermuda.

“It is therefore imperative that the Bermuda Government forges its own contacts and relationships with French authorities and nurtures them with periodic personal contact going forward.

“Such relationships will be essential in dealing with the ever-changing economic and political landscape that is characteristic of today’s Europe.

The Minister said he also attended the International Regulatory Conference held annually by ABIR in Brussels. The focus of the conference was the imminent decision by the European Commission to grant Solvency II equivalency status to Bermuda.

Minister Richards said, “Bermuda is one of only three entities, along with Switzerland and Japan that are being considered for the first round of equivalency. It is the only country that is not a sovereign nation.

“Standard & Poor’s estimates that Bermuda has 16 of the world’s top 40 insurers and 2 in the top 10. By contrast Europe has 11 of the top 40, and the US has 6 of the top 40. In terms of share of global insurance premium, Europe has 56%, US 19%, Bermuda 16%, and Asia 9%.

“This is the context in which Bermuda, the dot on the map, is being considered in the first wave of entities seeking Solvency II equivalency.”

The Minister’s full statement follows below:

Mr. Speaker, I pleased to report to this Honourable House highlights of my visit to Paris and Brussels last week.

France

Mr. Speaker, by way of background, Honourable members will recall that France black listed Bermuda as an uncooperative jurisdiction last year. Such a black listing imposed a 75% withholding tax on all money transfers from France to Bermuda. Although we have subsequently been removed from that black-list, it was thought beneficial that contact be made with certain senior members of the French government.

While in Paris, accompanied by our representative in Brussels, Mr. Alastair Sutton, I visited with officers of all three branches of the Government of France: the President of the Senate Finance Committee, Mr. Phillipe Marini, Mr. Pierre-Alain Muet, Member of the Finance Committee of the Assemble Nationale and Mr. Gael Perraud, Member of the Cabinet of the Minister of Finance.

These meetings were very beneficial as we were able to dispel many misconceptions the French officials had about Bermuda, our tax system, our government structure, and our constitutional status. However, nothing that we said really changed their minds that Bermuda was “Un paradis fiscale,” – a Tax Haven.

Mr. Speaker, there was limited appreciation of the size and importance of Bermuda’s reinsurance industry, although Bermuda has covered and paid claims for some major disasters in France. French officials uniformly expressed concern about large multinational corporations conducting business in their country and not paying their “fair share” of taxes in France. Many such corporations have holding companies in Bermuda.

There is a stark difference between the way taxes are viewed on this side of the Atlantic and in France. In France taxes are viewed as a moral obligation while over here it is viewed as a legal one. That difference in philosophy will be the cause of challenges between ourselves and France going forward.

It is therefore imperative that the Bermuda Government forges its own contacts and relationships with French authorities and nurtures them with periodic personal contact going forward. Such relationships will be essential in dealing with the ever-changing economic and political landscape that is characteristic of today’s Europe.

Brussels

Mr. Speaker, I attended the International Regulatory Conference held annually by ABIR in Brussels. The focus of this conference was the imminent decision by the European Commission to grant Solvency II equivalency status to Bermuda.

Mr. Speaker, Bermuda is one of only three entities, along with Switzerland and Japan that are being considered for the first round of equivalency. It is the only country that is not a sovereign nation. ABIR members collectively conduct very significant business in Europe: $70.1 billion in gross premiums; $95.4 billion in surplus. Standard and Poor’s estimates that Bermuda has 16 of the world’s top 40 insurers and 2 in the top10. By contrast Europe has 11 of the top 40, and the US has 6 of the top 40. In terms of share of global insurance premium, Europe has 56%, US19%, Bermuda 16%, and Asia 9%. This is the context in which Bermuda, the dot on the map, is being considered in the first wave of entities seeking Solvency II equivalency.

Mr. Speaker, the final decision is likely to be made next summer. The Bermuda insurance industry has worked very hard, along with the BMA, to show that our regulatory and legal structure will yield similar outcomes as that which has been devised in Europe. While the analysis of our regime and the recommendation for equivalency is being made at the technical level involving ABIR and the BMA, the final decision will be made by the European Commission and the European Parliament, i.e. – at the political level. It is therefore imperative for Bermuda to continue its contacts at this political level to ensure success for our most important economic sector.

Mr. Speaker, continued personal contact will be necessary with France in order to avoid any more nasty surprises like we had last year.

Thank you Mr. Speaker.

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Comments (15)

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  1. Own Goal says:

    Good job on scoring an own goal and inviting the French to start making random information exchange requests with this new relationship you want to forge.

    should have put another $3,000 on the club world fare and gone to China to try and get some of the $50+ billion that’s already been invested in our Caribbean competitors.

    First The Cog digging for Sharia business in the deserts of Qatar, now The Snob telling France he will shop all Bermuda incorporated corporates (including FTSE/NYSE listed subsidiaries) whenever the French ask.

    some people should stick to tending to their Government contracts and not get into overly complex economic and diplomatic relations when they seemingly forget they (actually we) have absolutely no leverage with a large nation like France.

    yet another own goal

  2. nuffin but the truth says:

    Quote: However, nothing that we said really changed their minds that Bermuda was “Un paradis fiscale,” – a Tax Haven.

    then you achieved “rien” <<< it's French,look it up.

  3. No Brainer says:

    Am I the only one concerned about not having a Legacy for my kids to inherit?

    Why is the Government not focusing on developing new relationships with Emerging Markets and ensuring that any legislative impediments to us attracting new business from Emerging Markets are removed immediately.

    Whilst we recognise that it is more comfortable for our Economic Development Minister and Minister of Finance to spent time with and continue to lobby the old established family and business contacts in the US, UK and Western Europe even they must realise we will not grow our IB proposition from these existing well established relationships.

    The only growth now is in the ILS market and that may not be sustainable if we have 3 years of back to back natural disasters and short term capital loses appetite for Cat Bond risk as an asset class, making re-insurance companies the dominant players again.

    G7 countries, like France, are all now fighting OFCs to shut them down and increase domestic tax revenues and it is only a matter of time before we feel the permanent effects of all the TIEAs, US FATCA and soon to be enacted UK FACTA for the overseas territories and private wealth managed offshore. Do our Ministers read what is happening in the EU and the continuing anti-competitive tone to OFCs?

    With some urgency we must now:

    a) Focus on developing relationships with Emerging (non traditional) Markets, even if you think the people are beneath you and you feel you are better than them and even if you prefer your relationships with your friends in the US and UK

    b) Establish new direct air routes with these Emerging Markets so that their affluent population come and take a look at quaint Bermuda since these people spend money when they travel, not like the average US or UK (non IB related) visitor who after saving for the plane fare and hotel could never even afford a dinner for two at Tom Moores let alone eating out at LVs, Barracuda, Port-o-Call and our new attraction and Hamilton Princess.

    c) Commence an intense business development initiative with key business networks and large corporates in Emerging Markets.

    Stop wasting energy on PRCs, who since they are so committed to Bermuda will have no problem relinquishing their existing passports before accepting Bermuda status to demonstrate their desire to now become Bermudian and take a permanent stake in the Islands longer term progress instead of the intangible yet important right to vote in the 2017 General Election.

    Please stop wasting time and our tax dollars in France.

    If you must take non-productive trips go to Miami and visit South Beach and bring back some nice T-Shirts for Cup Match and post your Instagram photos when you go dancing at Mangos, Cameo or The Clevelander…………..or follow up on the fact finding in Singapore for Casinos, there is NOTHING for BERMUDA or our existing IB, whats left of it, in FRANCE.

    Don’t your Technical and Policy Advisors sit with you weekly and discuss global trends and how Bermuda’s existing strengths can be quickly deployed in new markets as a Quick Win?

  4. Sickofantz says:

    The French are perfectly right we ARE a tax haven. If the Government does not want to be a tax haven then a first move would be to stop allowing the incorporation of business here who do not have an operational office actually involved in the business in which they operate.

    Sounds much better in French though.

    • JustAskin2 says:

      Agreed. They have been doing that for years.

  5. JustAskin2 says:

    From what I understand (and correct me if I’m wrong), these ‘Bermuda’ businesses either have no physical office in Bermuda and show incorporation/business on paper, complete with paper meetings, etc., or they will open an office in Bermuda with one receptionist and maybe an executive popping in out and maintain that they are Bermuda-based (exempt from foreign taxes?) while doing absolutely no business in Bermuda. This (I’m told) has been going on for years.

  6. Rhonda Neil says:

    Bermuda is a tax haven, who we trying to kid. ST. OBA only works in Bermuda.

  7. Rhonda Neil says:

    Dr. Gibbons stood in the House today speaking of 1.5 plus in Trust business, secertive money, flowing through Bermuda, pa haha wanna bet some of that is ill gotten. Ya right, I have a bridge to sell, the Brooklyn one

  8. I am sorry but I take offence to being called sumthin I am not….did you say fiscal?…..Do dey vhatoo get fiscal with me?….tellem I said “Let’s dance”….an put on some dancin music!

  9. Just find some contactsthat can give us a better resume’/CV.

  10. Valirie Marcia Akinstall says:

    Rather than indulging in the overtly sarcastic comments appended to this article, I would like to say that No Brainer has legetimate points up until s/he starts the paragraph, “Stop wasting energy on PRCs…”

    Bermuda does need to seriously engage in opportunities coming from Emerging Markets, but as OBA conservative politicians, I have never seen you demonstrate openness towards non-traditional markets.

    However, since you are convinced that you need a presence in Paris, then I sincerely hope that you will not only consider hiring Bermudians but will use Bermudian consultants who have the education, experience and are fluent in french. One person comes to mind, Renee Webb, who has all the qualifications as outlined above. I was in university in Paris whilst she started out working after she graduated in Paris.

    The one policy that former premier Cannonier introduced that distinguished the old UBP from the new OBA, is the party’s willingness and commitment to working with anyone who has the ability, experience and/or talent. And that political policy is transparently operational as I write these comments, people such Randy Horton (House Speaker), and who (PLP) has been drafted in to redraft and amend the legislation on PRCs?

    I would hope that you will draw on the talent of Bermudians either abroad and/or in Bermuda rather than pay out exhorbitant sums to foreign based consultants to do what qualified Bermudians are able to competently accomplish.

    London, England

    City of London is attracking investments from markets in Nigeria, Angola, Ghana, etc., where oil wealth is racing ahead.

  11. Valirie Marcia Akinstall says:

    i

    • Own Goal says:

      OBA don’t want to establish new relationships with non-white countries, particularly if those countries could help turn our economy around, it’s important for UBP old guard to prove their old established links and contacts turned Bermuda around

      - change

      - images of black single mothers

      - images of black female professionals

      Ring a bell? We been took!

  12. Alvin Williams says:

    We will insist that Bermuda is not a Tax haven right up till the day the rest of the world desperate to fix their own fiscal short falls and determinate to make their national business conglomerates pay a greater share of taxes in the country where their citizens in control of these so-called multi-nationals reside; close low tax jurisdictions like Bermuda.
    And guess who will be leading the pack; none other than the so-called motherland Britain. What do you think that meeting which we were told to show up with the British prime minister was all about?
    Our former premier was naive to believe that he was going to have a private meeting with the British prime minister to put Bermuda’s interests on the table? I swear they must have heard the laughing all the way from White Hall to Buckingham palace. This current OBA government finance minister is fond of accusing Bermudians of not understanding the economy? Yet it is he who does not understand the world in which we live. You see we have been here before; I always like to refer to privacy on the high seas; once supported by the leading nation states of the day including Britain. They even had private ports where these international thieves use to take their looted goods so that governments could take their cut. Well the time came that Britain decided that supporting privacy on the high seas was no longer in it’s national interests and they with their navy which was the dominate force on the world’s oceans close them down. Those who did not have their ships sunk by the Royal navy were either hung or jailed. British national interests prevail over the commercial and merchant elites that profited from privacy on the high seas. We know that the economic elites in America and in other countries do not mind low tax jurisdictions and they had their political support; but that too will come to an end and we have already seen the signs that it is consider that low tax jurisdictions no longer have a role in the future world economy. The OBA finance minister states that Bermudians don’t understand the economy; well we will see who don’t have an understanding as our fixation with international business will in the end let us down in a changing economic world.

  13. Valirie Marcia Akinstall says:

    @Alvin Williams…

    I think you mean ‘piracy’ on the high seas. An unintentional slip, and I make them a lot.

    London, England