Economic Substance Amendment Act 2019

The Economic Substance Amendment Act 2019 (Amendment Act) became operative on 28 June 2019. The Amendment Act creates an exemption for entities that are resident for tax purposes in a jurisdiction outside of Bermuda (provided such jurisdiction is not on the EU’s list of non-cooperative jurisdictions for tax purposes). This important development will place Bermuda on a level playing field with other jurisdictions that are subject to the EU’s economic substance requirements.

Information received by the Registrar of Companies (RoC) from an entity to support its non-resident status will be provided to the foreign competent authority of the jurisdiction where the holding entity, the ultimate parent entity, the owner or the beneficial owner of the non-resident entity is incorporated, formed and registered or resident.

Draft Guidance Notes

The RoC released Draft Economic Substance Requirements – General Principles (Draft Guidance Notes) on 26 June 2019 for industry consultation. The Draft Guidance Notes will assist entities in determining whether they are within scope of the economic substance requirements and, where entities are in scope, provide guidance on how to satisfy these requirements. Additional sector-specific guidance notes will be released by the RoC in due course. The Draft Guidance Notes state that the RoC is in the process of building an e-registration system to accept and manage the economic substance declarations and it is anticipated that the e-registration system will launch in the second quarter of 2020.

Next Steps?

The Draft Guidance Notes reiterate that entities incorporated, formed and/or registered on or after 1 January 2019 are immediately subject to the Economic Substance Act 2018 while entities incorporated, formed and/or registered prior to 1 January 2019 will be subject to the ES Act from 1 July 2019.

Appleby has a regulatory team with a specialised knowledge and in-depth understanding of the economic substance regime. For further information please contact Tim Faries, Sally Penrose or your usual Appleby contact.

Type

Insight

Sectors

Economic Substance

Locations

Bermuda

Share
Twitter LinkedIn Email Save as PDF
More Publications
8 Apr 2021 |

Doing business from and within our shores

Bermuda is a hub for international business, which is one of the top contributors to our economy and...

25 Mar 2021 |

Changes to the Employment Act 2000 – Part 4

This Article is Part 4 of our series on the amendments to the Employment Act 2000 (“Act”) that w...

25 Mar 2021 |

Full Steam Ahead at the Jersey Ships Registry

Against a backdrop of uncertainty surrounding Brexit and the difficulties created by the global pand...

24 Mar 2021 |

Economic Substance update Q1 2021

Economic Substance update Q1 2021

17 Mar 2021 |

Need for high-layer capacity drives cat bond surge

Catastrophe bonds played a bigger role backstopping the insurance sector at recent reinsurance renew...

12 Mar 2021 |

Material adverse change clauses in light of the Covid-19 pandemic

Experts from each of our key global offices provide jurisdiction specific advice and answer question...

11 Mar 2021 |

Valuation of shares in M&A deals

The continuing presence of the Covid-19 pandemic may prompt companies to consider making strategic a...

8 Mar 2021 |

Appleby Celebrates International Women’s Day

International Women’s Day is celebrated annually in support of gender equality and equal participa...