Finance Minister’s Visit To Brussels And Paris

June 27, 2016

Speaking in the House of Assembly on Friday [June 24], Minister of Finance Bob Richards provided an overview of his visit to Brussels and Paris, and various meetings he held with European officials.

The Minister said, “The main purpose of this visit was to consolidate and enhance Bermuda’s reputation, thereby strengthening Bermuda’s relations with the EU and its Member States [as well as with the OECD Secretariat] and diminishing the risk of action adverse to Bermuda’s business interests.”

The Minister’s full statement follows below:

Mr. Speaker, I am pleased to be able to inform the House of the highlights of my fourth visit to Brussels and Paris as Finance Minister. I was accompanied by Alastair Sutton; Bermuda’s Advisor in Brussels’ and part of our “competent authority” there.

The main purpose of this visit was to consolidate and enhance Bermuda’s reputation, thereby strengthening Bermuda’s relations with the EU and its Member States [as well as with the OECD Secretariat] and diminishing the risk of action adverse to Bermuda’s business interests.

European Commission

In the European Commission, we met the Head of Cabinet of the UK Commissioner Lord Hill, and the Head of Justice Commissioner Jourova, as well as Mark Gray, a senior official in the Directorate General [DG] of Justice and formerly an advisor for 10 years to Commission President Barroso. We also met the EU Commissioner for Taxation Mr. Pierre Moscovici, formerly French Finance Minister at the time of Bermuda’s blacklisting by France in August 2013.

Mr. Speaker, the meeting with Mark Gray was “informal” as he is a long standing “friend” of Bermuda, and provides helpful advice on a wide range of issues of direct and indirect concern to Bermuda. On this occasion, our meeting fell into two parts. First, Mr. Gray explained the current situation in the EU institutions as regards the “Brexit” issue, where the referendum on UK EU membership took place yesterday. Secondly, as an official in the services of Commissioner Jourova, Mr. Gray briefed us on the key issues to be raised with the Cabinet of Jourova, especially on the 4th Anti Money Laundering Directive [AMLD] and the central register issue.

Meeting with the Cabinet of Commissioner Lord Hill

Mr. Speaker, we met Matthew Baldwin [Head of Cabinet], who was accompanied by Piotr Plizga [Policy Officer, – Directorate-General for Financial Stability, Financial Services and Capital Markets Union [DG FISMA]. This was a relaxed and positive meeting, not least because of the cordial meeting I already had with Commissioner Hill in June 2015. Mr. Baldwin clearly knew Bermuda well [constitutional situation and relations with the EU] and therefore the main purpose this time was to update him on current developments in Bermuda.

Mr. Baldwin provided updates on the EU Audit Directive and Bermuda’s assessment under the Alternative Investment Fund Managers Directive [AIFMD] for passporting purposes, noting that he expected positive outcomes in both areas. On the tax front, Mr. Baldwin noted that since the Minister’s last visit a year ago, Bermuda had been removed from the Commission’s list of “non-compliant” jurisdictions. He said however that there was pressure on all tax authorities in the EU to increase fiscal revenues and that the Commission’s external tax strategy was a response to this. In addition, the push for increased transparency in all areas [including through the use of central registers for identifying ultimate beneficial owners of companies] reflected international concerns as expressed by the G20 and further driven by events such as LuxLeaks and the Panama Papers.

In conclusion I reiterated Bermuda’s post-War policy of attracting and developing a world-class insurance and re-insurance sector, which was a partner for insurers around the world including in the EU.

Meeting with the Jourova Cabinet

We met Isabelle Perignon [Member of Cabinet] and Alexandra Jour-Schroeder [Head of Unit for Criminal Law in the Directorate General Justice]. Commissioner Jourova was absent on an official visit to China. Since this was the first meeting between the Bermuda Government and the Jourova team, we outlined the “Bermuda story”.

Mr. Speaker, this was a cordial and cooperative meeting which provided an excellent basis for ongoing cooperation, not only on Anti Money Laundering [AML] issues, but on issues such as tax and the regulation/supervision of financial services where the Commission now increasingly adopts a comprehensive or holistic approach to “good governance” issues. It is potentially important to have the support therefore of Commissioner Jourova, her Cabinet and DG Justice, when Bermuda is being assessed for example under the AIFMD.

Briefing of ABIR

Mr. Speaker, during this visit, I met with ABIR members and the ABIR Secretariat, who were in Brussels for their annual EU meeting on June 20th and was able to brief attendees on the issues raised and the broad [and largely positive] outcomes of my meetings in Brussels.

Mr. Speaker, my schedule on Wednesday was quite daunting, leaving Brussels in the morning for Paris to meet Mr. Saint Amans, then back to Brussels for the Moscovici meeting then boarding the Eurostar to London for the dinner with key stakeholders.

France

Meeting with Pascal Saint Amans [Head of tax policy in the OECD Secretariat]

In Paris, we met Mr. Pascal Saint Amans, Head of Taxation in the OECD Secretariat. Mr. Speaker, Mr. Amans was accompanied by Maikel Evers [Counsellor-Coordinator for Base Erosion and Profit Shifting [BEPS]]. This meeting was also [in a genuine sense] cordial and constructive. Not only is Bermuda well-known and well-appreciated by the OECD/Global Forum as a result of its representation by Assistant Financial Secretary Wayne Brown, but this meeting built on the positive encounter between myself and Secretary General Gurria and Saint Amans in June 2015. Once again, the value of consistent and constructive engagement was demonstrated. It was pleasing to note that Mr. Amans said [repeatedly] that, in the OECD’s eyes, Bermuda was “not the bad guy”.

Time prevented more detailed discussion. Nonetheless, this was a positive meeting building on that of June 2015. Bermuda’s current reputation, both in the Global Forum and in the OECD itself is riding high.

Meeting with EU Commissioner Pierre Moscovici – Brussels

Mr. Speaker, Commissioner Moscovici was accompanied only by his Cabinet member for tax policy, Elena Scoppio. I took the opportunity of my first meeting with the former French Finance Minister responsible for listing Bermuda 3 years ago, to outline Bermuda’s first-class track-record of compliance in tax, AML and of course financial regulation and supervision [referring to the recent Commission decision on equivalence under Solvency II]. I also made it clear that Bermuda was not a “brass-plate” jurisdiction and was home to relatively few holding companies. Even for these holding copies I advised that the Bermuda central register, which had existed for 70 years and was consistently updated, provided accurate information on beneficial owners, which could be shared with other competent authorities and law enforcement agencies.

Mr. Speaker, as far as continued dialogue is concerned, Moscovici made it clear that, before any step was taken to include any jurisdiction on any list, there would be a bilateral dialogue with the jurisdiction concerned. Moscovici formally confirmed that, unlike last year, there would in future be “no surprises”.

In a final exchange, we said that for the Commission to use rates of tax as a criterion for blacklisting and/or sanctions would be to “cross the Rubicon”. Without agreeing with us, Moscovici said that “we will not do that without the agreement of Member States” and that direct tax rates were [currently] a matter of “subsidiarity” [i.e. national competence] under EU law.
The meeting ended amicably with photographs and a pleasant reference by Moscovici to his one visit to Bermuda over 40 years ago.

London Dinner

Following my visit to Europe I was able to manage a brief stay in London before travelling back to Bermuda. During this time I hosted a private Ministerial dinner. During the evening I provided an update on the state of Bermuda’s economy, global tax & transparency issues, and the positive recognition of Bermuda at the recent anti-corruption summit in London. This was followed by a question and answer session. The dinner provided an excellent opportunity for me to have an informal engagement with key stakeholders and friends of Bermuda in the UK, which included amongst others, former UK Treasury Minister Lord Sassoon.

Conclusion

This visit was timely in two respects. First, we were able to strengthen Bermuda’s already excellent relationship with the OECD and Global Forum. Secondly however, coming days after the Commission’s surprise publication of a list erroneously containing Bermuda’s name, we were able to engage directly with the EU Commission [at the highest level], as well as, with the European Parliament TAXE Committee with a view not only to informing them about Bermuda, but also laying the groundwork for getting Bermuda off the Commission’s list in the shortest possible time.

Mr. Speaker in my view, the visit achieved its purpose, but continued engagement in the weeks and months ahead is vital as the fact that Bermuda is a no tax jurisdiction means that we are still on the EU radar as it relates to a common external policy on tax.

Lastly, despite the UK’s membership in the EU, Bermuda has been routinely treated as a “third country” by the EU, meaning, for instance Solvency II Equivalence has been granted to us in our own right – not related to Britain’s membership. Issues relating to taxation, Anti-money Laundering, and transparency all treat Bermuda as a “third country” already therefore there should be little change in these respects. However, it will be vital for Bermuda to continue its engagement to monitor events as they unfold.

Thank you Mr. Speaker.

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