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Bermuda, its beaches, its coconut trees, and its... crypto companies. For a few years now, the British archipelago located in the middle (or almost) of the Atlantic Ocean has been attracting players of the ecosystem. The latest arrival is Coinbase. The American giant has just set up a trading platform for institutional players.
Bermuda is not the only "exotic" destination to welcome Exchanges and other web3 companies. It is also the case of Jersey or the British Virgin Islands which attract suitors thanks to their tax system, and especially to their regulatory flexibility, whereas the United States, and even the European Union, do not necessarily offer a sufficiently favorable environment.
👉 Tax incentives
The tax dimension plays a role for some players. Whether in Bermuda or the BVI, there is no corporate tax and no capital tax for individuals. Companies must pay an annual tax based on the amount of their net assets.
"This tax is between 2,000 and 32,000 Bermudian dollars (one Bermudian dollar is worth about 0.9 euros)," explains Axel Sabban, a tax lawyer associated with the firm Revo Avocats.
However, this system has its limits, since in order to benefit from the taxation of these jurisdictions, one must have activities on site. "If the operational center, i.e. the teams and the activity, is in Europe or in the United States, the company will have to pay its taxes in Europe or in the United States", underlines Arnaud Touati, associate lawyer at Hashtag Avocats.
Companies can therefore benefit from a very advantageous tax system, but a letterbox is not enough. "The authorities are increasingly vigilant on this point," confirms a French investor.
👉 Regulatory Motivations
The main explanation for the attractiveness of Bermuda and other "tax havens" is their regulatory flexibility. This concerns the creation of companies. "It is much easier to create a crypto company in Bermuda or Jersey", confirms a French player.
The flexibility of the products is also emphasized. In the case of Coinbase, this is what pushed the American giant to launch its derivatives platform in Bermuda and not in Europe. "They were able to do it in a few weeks, while in Europe it would have been almost impossible," explains Arnaud Touati.
Another point also comes up a lot: regulatory visibility. "Jurisdictions like the British Virgin Islands have plenty of defaults, but there is regulatory clarity on cryptos that allows a project to grow without fear of being shut down at any time," confides one London-based entrepreneur.