Economic Substance Update – Guidance Notes and Beyond

Economic Substance Update – Guidance Notes and Beyond

About Jeremy LeeseJeremy Leese

Jeremy’s practice focuses on corporate finance, mergers and acquisitions, corporate reorganisations and restructurings, banking and international real estate finance, structured finance, as well as regulatory and legislative compliance.

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At the end of June 2019, the Government of Bermuda issued draft economic substance guidance notes. The aim of the guidance notes is to assist in determining whether entities are in scope of the requirements of the economic substance legislation and regulations, how to satisfy such requirements, and provide guidance as to how the Registrar of Companies will measure and assess the criteria for meeting the economic substance requirements.

It is anticipated that the coming months will see discussions surrounding the harmonisation of economic substance regimes in each of the Crown Dependencies and Overseas Dependent Territories, such that a level playing field will be sought for the major criteria to be met across all jurisdictions. Further amending legislation in Bermuda, following on from the recent tax residence carve out, may follow, but the details thereof cannot yet be determined with any degree of certainty. At the end of this harmonisation phase, we would expect the guidance notes, with any minor amendments, to be settled, a final form published and for sector specific guidance notes to follow. By way of reminder, the current legislation and regulations are in effect and all Bermuda companies must take action to comply. If you require any assistance in analysing Bermuda’s economic substance regime as it stands, please feel free to reach out to our Jeremy Leese or Brian Holdipp.