Bermuda’s Economic Substance Act 2018 (Bermuda Substance Act) and the Economic Substance Regulations 2018 (Bermuda Substance Regulations) (Bermuda ES Act) became operative on 31 December 2018. The regime became applicable immediately to new registered entities incorporated or registered after that date. For existing registered entities, there is a six-month transition period. Existing registered entities that are carrying on relevant activities must comply with the Bermuda ES Act by 1 July 2019.
THE BRITISH VIRGIN ISLANDS
The BVI’s Economic Substance (Companies and Limited Partnerships) Act, 2018 (BVI Substance Act) came into force on 1 January 2019 (BVI Substance Act). The BVI Substance Act is supplemented by the BVI’s Economic Substance Code which is currently in draft form and is expected to be finalised in the coming weeks. In-scope companies and limited partnerships incorporated or formed prior to 1 January 2019 must comply with BVI economic substance requirements commencing no later than 30 June 2019.
THE CAYMAN ISLANDS
The Cayman Islands’ International Tax Co-operation (Economic Substance) Law, 2018 (Cayman Substance Law) and The International Tax Co-Operation (Economic Substance) (Prescribed Dates) Regulations, 2018 (Cayman ES Law) came into force on 1 January 2019. The regime became applicable immediately to new relevant entities incorporated or registered after that date. For existing relevant entities, there is a six-month transition period. Existing relevant entities that are carrying on relevant activities must comply with the Cayman ES Law by 1 July 2019.
What Can Appleby do to Help?
We recommend that Bermuda, BVI and Cayman entities that have not already given consideration to whether or not they are subject to the economic substance regimes of their respective jurisdictions do so as soon as possible. Those that appear to be in scope of the new regimes and are undertaking relevant activities must meet the applicable economic substance requirements. Appleby can help with the classification analysis and also advise with respect to meeting reporting and compliance requirements.
This article is current as at 31 May 2019. Appleby continues to monitor further amendments and will provide updates in due course.