BVI Economic Substance

The Economic Substance (Companies and Limited Partnerships) Act, 2018 (the Act) came into force on 1 January 2019 and was as a result of recommendations by the Code of Conduct Group for the EU Council to assist with assessing:

  • Tax transparency
  • Fair taxation
  • Implementation of anti-BEPS measures

The Act imposes economic substance requirements on BVI companies and limited partnerships where the entity carries out a ‘relevant activity’ and is ‘tax resident’ to ensure that they have sufficient substance to comply with the legislation.

Relevant activities are:

  • Banking
  • Insurance
  • Fund management
  • Financing and leasing
  • Headquarters
  • Shipping
  • Distribution and service centres
  • Holding entity
  • Intellectual property

Holding entities and intellectual property have different requirements for substance but all others need to evidence:

  • Management and control in the jurisdiction
  • Core Income Generating Activities (CIGA) are undertaken in the jurisdiction in relation to the relevant activity
  • That it maintains adequate physical premises in the jurisdiction
  • It has adequate number of appropriate employees in the jurisdiction
  • Adequate expenditure is incurred in the jurisdiction in relation to the relevant activity

There will be ongoing reporting obligations in relation to substance and the level and frequency of reporting will depend on the jurisdiction of the entity, its tax residency and whether or not it is carrying out a relevant activity

Nerine Trust Company (BVI) Limited can assist with providing substance in BVI by performing core income generating activities.

BVI Economic factsheet and Guidance Notes.