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Economic substance in the British Virgin Islands

Economic Substance legislation in the British Virgin Islands requires certain entities that are incorporated or registered in the British Virgin Islands, and which conduct one or more of a setlist of relevant activities, to comply with local substance requirements known as ‘economic substance’. The legislation follows closely the approach taken by the Crown Dependencies of the UK (Jersey, Guernsey and the Isle of Man) and the other UK Overseas Territories including Bermuda and the Cayman Islands.

The following specifically defined activities are considered relevant activities and relevant entities must comply with the economic substance rules in the relevant jurisdiction. In order to help you to determine whether or not your entities are required to comply with economic substance requirements, our expert team of lawyers has developed an online classification solution, which users can access at their convenience for a flat fee.

The following specifically defined activities are considered relevant activities and relevant entities must comply with the economic substance rules in the British Virgin Islands.

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Classification, compliance and reporting obligations

We are known as a market leader and ‘go-to’ firm for British Virgin Islands economic substance advice.

For more complex structures that do not fall very simply into the “in” or “out of scope” boxes, our legal team have been at the forefront of the development of the legislation in the BVI and are ideally placed to perform a full review of your entities to determine and advise on all aspects of compliance with substance legislation and, where appropriate, what actions must be taken.

In addition to understanding their compliance obligations, entities should ensure that they are prepared to meet their reporting obligations – particularly if they carry on any of the nine defined “relevant activities”, for which the requirements can be complex. Every company and limited partnership registered in the British Virgin Islands must file an economic substance report with the International Tax Authority via its registered agent within six months of the end of each compliance period. Our team of specialists are also on hand to provide guidance and to assist with the preparation of reports.

Please contact one of the key contacts below for help or fill out our enquiry form here.

Establishing substance in the BVI

For clients that do need to establish and demonstrate substance in the British Virgin Islands, we are perfectly positioned to provide bespoke and integrated legal and administrative substance solutions. We provide a full suite of governance, resident director, and accounting services. We can also work with you to obtain trade licences, work permits, premises, specialist equipment, or dedicated human resources.

If you manage or own an entity that may be affected by substance rules based on the nature of its operations, please contact one of the key contacts below.

International Tax Authority (ITA) investigations and enforcement notices

The ITA has broad investigation and enforcement powers as regulator under economic substance legislation. It is important for entities and their operators to be aware of their rights and obligations and the applicable deadlines. Our dedicated team can provide solutions-oriented advice and support when dealing with ITA investigations or enforcement action.

If you or your entity have received a notice or enquiry from the ITA, please contact one of the key contacts below for help or fill out our enquiry form here.

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