Bermuda is the latest fund domicile to sign an agreement with the UK that will provide HM Treasury more tax information on overseas accounts owned by UK citizens. The bill mirrors the US’ Foreign Accounts Tax Compliance Act (FATCA).
Bermuda follows Guernsey, Jersey, the Cayman Islands, Gibraltar and the Isle of Man, which have all signed UK FATCA agreements. The agreement was signed by Bermuda’s Minister of Finance Bob Richards and the UK Secretary to the Exchequer, David Gauke, on Monday.
Unlike all other jurisdictions part of UK FATCA, Bermuda, signed a “Model II” agreement that requires GPs based on the island to file directly to the UK’s tax authority HMRC on an annual basis.
Under a “Model I” agreement, GPs would engage with their local tax authority which then would exchange the information with HMRC.
One US-based tax partner said countries may elect the Model II IGA because their governments wouldn't want to adopt the internal laws, regulations and enforcement provisions that FATCA's Model I requires.
Fund managers subject to UK FATCA have until May 31 2016 to supply 2014-2015 tax information on their UK investors. Only UK LP tax information recorded on or after 30 June 2014 will be subject to reporting, meaning LPs' 2013 tax information will not need to be submitted, according to HMRC.
Other domiciles that have yet to sign mandatory UK FATCA-style agreements include the Anguilla, the British Virgin Islands, Montserrat and the Turks and Caicos Islands.