A Hub for the Global Enterprise: Why You Should Consider Starting a Business in Bermuda

If you mention Bermuda to most people, chances are they will either think of its famous beaches or its high standard of living. However, these two elements do not tell the full story, as striving for a unique profile has always set Bermuda apart from other international financial centers. For many decades, Bermuda’s pursuit to meet high standards and align itself with the best practices worldwide has distinguished it from other offshore centers. It’s all about reputation and quality over quantity, and such companies like Airbus, Boeing, BMW, Land Rover, Sperry and Bremont, Louis Vuitton and Moet & Chandon chose to register in Bermuda for all the same reasons. The offshore financial centers in the Caribbean have become economically successful in the last 30 years. Today, the Cayman Islands, Bermuda, British Virgin Islands appear in the most important ranking worldwide, the Global Financial Centres Index (GFCI), which is the main tool that points out how attractive financial centers are around the world and allows us to understand their growth and competitiveness over time. The factors taken into account include evidence on the competitiveness of the telecommunications infrastructure, information on how favorable are the regulations for companies, government effectiveness indexes, and indexes on the perception of corruption, among others. According to the latest GFCI ranking, Bermuda is now the third-highest ranked financial center in the Latin America and Caribbean region, having been overtaken by the Cayman Islands and the British Virgin Islands. One of the reasons why Bermuda dropped in this list was the fact that the Council of the European Union added it to its blacklist of non-cooperative jurisdictions for tax purposes. Being added to this list amounts to a move to “name and shame“ rather than to impose practical measures. However, Bermuda immediately took some steps towards changing this situation and introduced economic substance rules, expressing hope and expectation that it will be removed from the blacklist on the next evaluation. The efforts did pay off, and Bermuda was removed from a European Union list of non-cooperative tax jurisdictions in May 2019, with the EU council saying Bermuda had taken positive steps, and that it “remains committed to addressing

EU concerns in the area of collective investment funds.” Today, Bermuda’s attitude is crystal clear — “Quality rather than quantity of the financial transactions.“ Curtis Dickinson, Bermuda’s Finance Minister, noted that Bermuda has a strong message for those who see this offshore financial center just as a perfect place to hide misdeeds: “We will rat you out, plain and simple as that, because our reputation is a critical part of our calling card, and unless we can demonstrate how serious we are about this, then people will not take us seriously.“ As one of the leading offshore financial centers, Bermuda has all the essential components necessary for a robust international business community. There are many advantages of doing business here — think progressive regulatory regime, lower tax jurisdiction, the wide availability of experienced service providers, modern infrastructure, a stable political and economic climate, and the quality of life that is enjoyed on the Island. One of Bermuda’s biggest attractions is its tax-neutral jurisdictional status, with zero tax on profits, income, dividends, or capital gains. What is more, it is relatively easy to start a business here, as company

registration is a fast and simple process. The length of time it takes to incorporate in this country is about 3 to 5 days, and it is typically affordable to run a corporation, as there is only an annual government and agent fee. Ross Webber, CEO of the Bermuda Business Development Agency (BDA), which has been pro-actively engaged in assisting start-ups, multinationals, and other corporate ventures since it was established in 2013, says that “We are committed to keeping international business here. We are pro-actively advising the sophisticated international business community about our conducive business environment and we are continually refining, augmenting, and simplifying the process to start, relocate, or grow a business here. Now is the perfect time to come to Bermuda. We are continuing to build on our success and well-deserved reputation as a jurisdiction that caters superbly to the global marketplace.” Bermuda’s location is also an important component of the list. Ideally located between Europe and the US, Bermuda is easy to get to with daily direct flights to and from London and US gateway cities. Webber noted that “As an international financial center, Bermuda is particularly well-positioned for European companies looking to add an offshore component.“ What is more, Bermuda has its own stock exchange (BSX), which is one of the largest offshore electronic securities markets in the world. It specializes in the listing and trading of equities, debt issues, derivative warrants, funds, hedge funds, insurance-linked securities, and other capital market instruments. Dickinson noted that “In as much as you have an international business that needs an offshore presence, we would argue that Bermuda is a great place to put it.“ And we have a few related numbers for you right here. Today, there are as many as 18000 Bermuda-based exempted and international businesses on this 20,6 square miles Island. Bermuda is ranked Number 1 in the world as an offshore center for insurance and reinsurance, with approximately 1500 businesses in this industry. The sector also consistently accounts for about 85 percent of the Island’s GDP. To be even more specific, in the global insurance and reinsurance sector, Bermuda is second only to London and New York. It’s also in the Top 3 for shipping and investment. More than 75 percent of the Fortune 500 companies have some presence in Bermuda. Bermuda is also a top destination for private jet travelers. Aoife O’Sullivan, partner with the Air Law Firm noted that “The main reason is flexibility.“ And even though the travel industry has been exposed to the sudden drop in the tourism sector due to the coronavirus pandemic, the private jet industry has been on a roll, especially in the Caribbean. Anthony Tivnan, President at Magellan Jets, one of the leading private jet providers, noted that “The Caribbean Islands are extremely popular right now: Puerto Rico, the Turks, and Caicos, Barbados, Bermuda… Island travel is extremely active, and we’re counting on it to replace some of the European travel we typically do in the summer months.“ What is more, today Bermuda has earned a global leader in fintech and innovations involving blockchain title. Over the past several years and with the leadership David Burt, the youngest Premier ever elected to this position, Bermuda’s government agencies passed a string of new regulations aimed at creating infrastructure and ecosystem for innovation and technology with a specific focus on the applications of blockchain. The legislation, which included leading-edge fintech regulations for digital assets, has put Bermuda at the forefront of the blockchain revolution and made it a sought after destination for companies in the industry. On the end note, Ross noted that “While (re)insurance is our domicile’s most prominent industry, the strength of Bermuda’s economy is its multi-sector scope. The Island is a thriving center for investment management, trusts, private client and family office structures, as well as a global aircraft & ship registry, ship-management firms − plus new-economy ventures ranging from marine-sourced pharmaceuticals to e-commerce and technology start-ups. Bermuda’s sophisticated infrastructure and the corporate synergy it engenders have made the jurisdiction a hub for the global enterprise.“