Bermuda And Spain Agree Terms For Double Taxation Agreement

by Amanda Banks, Tax-News.com, London

02 October 2009

Negotiations for a bilateral tax agreement between Bermuda and Spain have been concluded with terms which are beneficial for setting up a captive insurance company in Bermuda.

When signed, benefits for Bermuda will include an exemption from 30% Spanish corporate tax rate on Spanish income earned by investors domiciled in Bermuda. Also a Spanish corporation investing in 5% or more of the shares in a Bermudan company will be exempted from Spain's 30% corporate tax rate on related dividend income, provided its Bermudan investment has been held for more than one year. This is especially relevant for Spanish companies who plan to set up captive insurance companies and other investment vehicles in Bermuda.

Bradley Kading, President and Executive Director of the Association of Business Insurers and Reinsurers (ABIR) was quoted by a Bermuda Ministry of Finance press release as saying that Bermuda's ABIR members write approximately 11% of the broker placed reinsurance for Spanish insurers and that it was a natural place for Bermuda's insurers to do additional business in the future.

The Spanish tax agreement, which provides for a full exchange of information on criminal and civil tax matters, is expected to be signed by the end of the year in Bermuda. The signing of the agreement will allow Bermuda to be removed from Spain's list of uncooperative jurisdictions (outlined in the First Additional Provision of the Spanish Law to Avoid Tax Evasion). Bermuda's finance minister, Paula Cox, has extended an invitation to Spain's Minister to sign the Agreement in Bermuda.

Currently, Bermuda has 15 signed tax information exchange agreements, most recently signing one with the Netherlands Antilles.

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