Economic Substance Requirements In Bermuda, The British Virgin Islands And The Cayman Islands

Each of the governments of Bermuda, the British Virgin Islands (BVI) and the Cayman Islands has passed legislation that will require certain entities carrying on “relevant activities” to have “economic substance” in Bermuda, the BVI and the Cayman Islands, respectively.

The legislation was introduced in response to concerns expressed by the Council of the European Union about the absence of clear general legal substance requirements for entities doing business in and through these jurisdictions.

Below is a summary of the economic substance requirements in Bermuda, the BVI and the Cayman Islands.

Bermuda

Bermuda’s Economic Substance Act 2018 (Bermuda Substance Act) and the Economic Substance Regulations 2018 (Bermuda Substance Regulations) 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