Bahamas Funds and The EUSD

The EU Savings Directive ("EUSD") which subjects savings income in the form of interest payments made in one Member State to beneficial owners who are individuals resident for tax purposes in another Member State to effective taxation in accordance with the laws of the latter Member State was implemented on July 1, 2005.

While The Bahamas is not a participant in the EUSD, industry participants have monitored its implementation. Arising from this review (based upon Guidelines published by the Swiss), The Bahamas has sought to clarify the status of funds domiciled in The Bahamas that remit funds beneficially owned by an EU resident individual to a paying agent in Switzerland.

Legal analysis has confirmed that a Bahamian domiciled fund or so-called "foreign fund" will not be within the scope of the Directive (as defined in the Swiss guidelines) where it meets certain criteria; for example, a fund whose shares are available for redemption on a less frequent basis than quarterly are