In April 2015, the BVI, the Cayman Islands and certain other jurisdictions were removed from Italy's blacklist of jurisdictions. Countries on Italy's blacklist are subject to Italy's "non-deductibility of costs" rules, meaning that expenses incurred by Italian businesses in transactions with residents in blacklisted jurisdictions would not have been deductible under Italy's tax regime. As of 9 August 2016, the Italian Ministry of Finance has gone a step further and has issued a decree amending the "whitelist" of countries that are deemed to allow for adequate exchange of information with Italy. Bermuda, the BVI, and Cayman have now been placed on this whitelist.

This is important news as countries on the whitelist can benefit from favourable tax regimes geared to the proceeds from certain investments made in Italy which enjoy exemption from Italian withholding and other taxes (which are levied at source income) and on capital gains. Bermuda, BVI, and Cayman investment vehicles would be able to invest in certain types of Italian assets which would be exempt from certain Italian taxes. These assets include, for example, interest on Italian Government issued bonds and notes issued by Italian securitisation vehicles together with capital gains from disposal of such bonds, the issuance of guarantees, income from stock lending and repos. The private equity sector may also benefit from this development as proceeds from investments in Italian real estate and in Italian undertakings for collective investment could receive Italian tax exemptions.

The decision by the Italian authorities fortifies the view that Bermuda, the BVI, and Cayman have in place a robust tax exchange information system which meets the right measure of international standards for cooperation and transparency. The Cayman Islands signed a bilateral Tax Information Exchange Agreements (TIEA) in 2012 with Italy. Bermuda, the BVI, and Cayman are (via the United Kingdom) subject to the requirements for tax information exchange under the multilateral Convention on Mutual Administrative Assistance in Tax Matters, of which Italy is also a signatory. Bermuda, the BVI, and Cayman also currently have such or similar tax exchange information agreements in place with many other countries across the world. These territories also implemented US and UK FATCA into their tax sharing information regime, and more recently, were early adopters of the OECD`s common reporting standards, which represents the most recent enhancement to each of their tax information sharing regimes. Bermuda, the BVI, and Cayman continue to walk in step with established international expectations as it relates to its cooperation in the fight against international financial crime and welcome this positive step of recognition by the Italian authorities as they continue to ensure that Bermuda, BVI, and Cayman investment vehicles are viable vehicles in which persons can transact business. For more information and key contacts please visit