Bermuda Economic Substance Amendments 2019

The Government has been engaged in active dialogue with the EU Code of Conduct Group and the OECD during the last 6 months to ensure equivalency with other 2.2 jurisdictions. This has culminated in the introduction of the Economic Substance Amendment (No. 2) Act 2019 and a further iteration of the Economic Substance Regulations.

The amendments, which came into force 24 December 2019, introduce key changes to the economic substance regime. One of the most significant changes is to the definition of "holding entity". The revised definition now only includes "pure equity holding entities". In order to fall within this new definition, an entity must acquire and hold equitable interests as its primary function, hold a controlling stake in another entity and must not carry on any other commercial activity. As a result of this change, those entities which were previously within scope of the economic substance regime solely on the basis that they held or managed "assets" but