Spotlight On Bermuda's Economic Substance Landscape

Utilising Bermudian entities to house assets requires certain economic substance standards to be met. Partner, Louise Charleson and Director of Client Services, Carol Feathers provide an overview of these requirements and their impact on Bermuda's thriving captive insurance industry.

The purpose of economic substance

The purpose of economic substance is to create a level playing-field between taxable jurisdictions (such as most European countries) and nominal or no tax jurisdictions, by ensuring that income streams from certain activities are based on actual local activity to validate the use of these jurisdictions.

Bermuda's economic substance laws and regulations are enshrined in the Economic Substance Act 2018, the Economic Substance Regulations 2018 (both as amended, together the ES Regime) and related Guidance Notes issued by the Minister of Finance on 18 September 2020.