Are you sure?
×
Please confirm...
Book a Call
×
Please enter your contact details below and someone from Appleby will get in touch with you.
Name
Required
Email
Valid email required
Phone
Please enter either your email or a phone number, or both.
We will store and use this information for the purpose of contacting you to discuss economic substance matters.
We will not add you to our mailing lists without your approval.
Please
click here
to open our Privacy Policy in a new tab.
Economic Substance Entity Classification Questionnaire - Bermuda
Please answer the following questionnaire to initially classify an Entity for the purpose of Economic Substance.
Please note that the types of entities that are considered "relevant entities" for the purpose of the Economic Substance regime will soon be expanded to include certain types of partnerships that are not currently listed in the drop down below. This section of the questionnaire will be updated once these amendments have come into force. If your Entity Type is a partnership that is not listed below but you would like to prepare for the eventuality of it being in scope, please
click here
to contact any member of Appleby's regulatory team for bespoke advice.
Section 1 - Entity Type
Type of Entity
Company registered under the Companies Act 1981 (Companies Act) (including exempted, local, permit and overseas companies)
Limited Liability Company (LLC) formed under the Limited Liability Company Act 2016
Partnership (exempted, exempted limited and overseas)
Other
The Entity is not within scope of the Economic Substance regime by virtue of its type.
The Entity is of a type that may fall under the Economic Substance regime in Bermuda. It will be necessary to continue with the analysis.
Section 2 - Tax Residence
Is the Entity resident for tax purposes in a jurisdiction outside of Bermuda that is not in Annex 1 to the EU list of non-cooperative jurisdictions
for tax purposes?
Yes
No
Can the Entity produce sufficient evidence to demonstrate that it is resident for tax purposes in another jurisdiction in either of the following ways?
a letter or certificate from the competent authority or tax authority of the jurisdiction in question, stating that the Entity is considered to be resident for tax purposes in that jurisdiction; or
an assessment to tax on the Entity, a confirmation of self-assessment to tax, a tax demand, evidence of payment of tax or any other document issued by the competent authority or tax authority for the jurisdiction in question.
Yes
No
Entities that are tax resident outside of Bermuda who are able to produce sufficient evidence that they are subject to taxation on income relating to their Bermuda relevant activities in a jurisdiction outside Bermuda, that is not listed in Annex 1 to the EU list of non-cooperative jurisdictions for tax purposes are not in scope of the Economic Substance regime in Bermuda. However, consideration should be given to whether an Economic Substance regime exists in the jurisdiction of tax residence.
Entities that are tax resident outside of Bermuda who are able to produce sufficient evidence that they are subject to taxation on income in a jurisdiction that is not listed in Annex 1 to the EU list of non-cooperative jurisdictions for tax purposes relating to their Bermuda relevant activities are not in scope of the Economic Substance regime in Bermuda. You have indicated that the Entity is tax resident outside of Bermuda but sufficient evidence is not available. The Economic Substance regime contains some flexibility about the form of proof that may be accepted by the authorities. It will be necessary to take legal advice, and possibly tax advice in the relevant jurisdiction.
Please
click here
to book a call.
Section 3 - Relevant Activities
Does the Entity carry on banking business?
An entity engages in banking business if it engages in deposit taking business for which a licence is required in accordance with the Banks and Deposit Companies Act 1999.
Yes
No
Unsure
Your responses indicate that the Entity is carrying on the Relevant Activity of banking and is therefore within scope of the Economic Substance regime in Bermuda. To satisfy the economic substance requirements, the Entity's core income-generating activities, with respect to the Relevant Activity, must be undertaken in Bermuda.
Where the Entity outsources any or all of its core income-generating activities to an affiliate or service provider, the core income-generating activities so outsourced must be undertaken in Bermuda.
Core Income-Generating Activities
The core income-generating activities of an Entity engaged in banking include the following:
(a) raising funds;
(b) managing risk including credit, currency and interest risk;
(c) taking hedging positions;
(d) providing loans, credit or other financial services to customers;
(e) managing regulatory capital; and
(f) preparing regulatory reports.
Economic Substance Requirements
A bank that is licensed under the Banks and Deposit Companies Act 1999 complies with the economic substance requirements where it complies with the applicable requirements in section 3 of the Economic Substance Act 2018 and regulation 3 of the Economic Substance Regulations 2018 as set forth:
(a) in the Companies Act 1981 relating to corporate governance; and
(b) in the Banks and Deposit Companies Act 1999, regulations, rules and other instruments made thereunder.
Interpretation of Terms
The information provided above includes certain terms that are defined in the legislation or expanded upon in supplemental materials, and others that are legal terms of art that may not directly reflect their ordinary meaning. The correct interpretation of these terms is essential to ensure that the analysis is accurate. For that reason, legal advice should be taken on the legislation and its application to your particular business.
Actions to Take
We recommend that you
click here
to book a call with one of our legal experts.
You should also be aware that our affiliated group of companies, Appleby Global Services (
AGS
) in Bermuda, Cayman, Jersey and Isle of Man, stands ready to assist with economic substance compliance matters. AGS offers registered office, director and fiduciary services, as well as assistance in meeting statutory requirements in respect of record keeping, reporting and filing. We are pleased to offer our clients both legal advice and corporate solutions to meet your needs in a single cost-effective and joined-up service.
Does the Entity carry on distribution business?
An entity engages in business as a distribution centre if it engages in the resale of goods purchased from a foreign affiliate.
Yes
No
Unsure
Your responses indicate that the Entity is carrying on the Relevant Activity of distribution business and is therefore within scope of the Economic Substance regime in Bermuda. To satisfy the economic substance requirements, the Entity's core income-generating activities, with respect to the Relevant Activity, must be undertaken in Bermuda.
Where the Entity outsources any or all of its core income-generating activities to an affiliate or service provider, the core income-generating activities so outsourced must be undertaken in Bermuda.
Core Income-Generating Activities
The core income-generating activities of an Entity engaged in business as a distribution centre include the following:
(a) transporting and storing goods; and
(b) managing stock and taking orders.
Economic Substance Requirements
An Entity complies with the economic substance requirements if:
(a) it is managed and directed in Bermuda;
(b) core income-generating activities (as may be prescribed) are undertaken in Bermuda with respect to the Relevant Activity;
(c) it maintains adequate physical premises in Bermuda;
(d) there are adequate full time employees in Bermuda with suitable qualifications; and
(e) there is adequate operating expenditure incurred in Bermuda in relation to the Relevant Activity.
Managed and Directed
Whether an Entity is being managed and directed in or from Bermuda will be determined having regard to:
(a) the location of strategic or risk management and operational decision-making or where the management of the Entity meets to make decisions regarding business activities;
(b) the presence of an adequate number of senior executives, employees or other persons in Bermuda who are suitably qualified and responsible for oversight or execution of its core income-generating activities or both;
(c) the location of board meetings (or managers' or partners' meetings, as the case may be) and the nature and frequency of those meetings held in Bermuda in relation to the overall number of meetings.
Adequacy
"Adequacy" has its ordinary dictionary meaning. It means "enough or satisfactory for a particular purpose". What will be adequate for each Entity to comply with the economic substance requirements in respect of its Relevant Activity(ies) will depend on the particular facts of the Entity and Relevant Activity having regard to the nature, scale, and complexity of the Entity and / or the Relevant Activity undertaken.
Interpretation of Terms
The information provided above includes certain terms that are defined in the legislation or expanded upon in supplemental materials, and others that are legal terms of art that may not directly reflect their ordinary meaning. The correct interpretation of these terms is essential to ensure that the analysis is accurate. For that reason, legal advice should be taken on the legislation and its application to your particular business.
Other Relevant Activities
It is not uncommon for an Entity to undertake more than one Relevant Activity. For example, an entity conducting distribution business may also be conducting service centre business
, headquarters business
, financing and leasing business
, intellectual property business
or holding company business
. Where an Entity conducts more than one Relevant Activity, the applicable economic substance test will have to be met in respect of each one.
Actions to Take
We recommend that you
click here
to book a call with one of our legal experts.
You should also be aware that our affiliated group of companies, Appleby Global Services (
AGS
) in Bermuda, Cayman, Jersey and Isle of Man, stands ready to assist with economic substance compliance matters. AGS offers registered office, director and fiduciary services, as well as assistance in meeting statutory requirements in respect of record keeping, reporting and filing. We are pleased to offer our clients both legal advice and corporate solutions to meet your needs in a single cost-effective and joined-up service.
Does the Entity carry on service centre business?
An entity engages in business as a service centre if it primarily provides consulting or administrative services to a foreign affiliate.
Yes
No
Unsure
Your responses indicate that the Entity is carrying on the Relevant Activity of service centre business and is therefore within scope of the Economic Substance regime in Bermuda. To satisfy the economic substance requirements, the Entity's core income-generating activities with respect to the Relevant Activity must be undertaken in Bermuda.
Where the Entity outsources any or all of its core income-generating activities to an affiliate or service provider, the core income-generating activities so outsourced must be undertaken in Bermuda.
Core Income-Generating Activities
The core income-generating activities of an entity engaged in business as a service centre include providing consulting or administrative services to a foreign affiliate.
Economic Substance Requirements
An Entity complies with the economic substance requirements if:
(a) it is managed and directed in Bermuda;
(b) core income-generating activities (as may be prescribed) are undertaken in Bermuda with respect to the Relevant Activity;
(c) it maintains adequate physical premises in Bermuda;
(d) there are adequate full time employees in Bermuda with suitable qualifications; and
(e) there is adequate operating expenditure incurred in Bermuda in relation to the Relevant Activity.
Managed and Directed
Whether an Entity is being managed and directed in or from Bermuda will be determined having regard to:
(a) the location of strategic or risk management and operational decision-making or where the management of the Entity meets to make decisions regarding business activities;
(b) the presence of an adequate number of senior executives, employees or other persons in Bermuda who are suitably qualified and responsible for oversight or execution of its core income-generating activities or both;
(c) the location of board meetings (or managers' or partners' meetings, as the case may be) and the nature and frequency of those meetings held in Bermuda in relation to the overall number of meetings.
Adequacy
"Adequacy" has its ordinary dictionary meaning. It means "enough or satisfactory for a particular purpose". What will be adequate for each Entity to comply with economic substance requirements in respect of its Relevant Activity(ies) will depend on the particular facts of the Entity and Relevant Activity having regard to the nature, scale, and complexity of the Entity and / or the Relevant Activity undertaken.
Interpretation of Terms
The information provided above includes certain terms that are defined in the legislation or expanded upon in supplemental materials, and others that are legal terms of art that may not directly reflect their ordinary meaning. The correct interpretation of these terms is essential to ensure that the analysis is accurate. For that reason, legal advice should be taken on the legislation and its application to your particular business.
Other Relevant Activities
It is not uncommon for an Entity to undertake more than one Relevant Activity. For example, an entity conducting service centre business may also be conducting distribution business
, headquarters business
, financing and leasing business
, intellectual property business
or holding company business
. Where an Entity conducts more than one Relevant Activity, the applicable economic substance test will have to be met in respect of each one.
Actions to Take
We recommend that you
click here
to book a call with one of our legal experts.
You should also be aware that our affiliated group of companies, Appleby Global Services (
AGS
) in Bermuda, Cayman, Jersey and Isle of Man, stands ready to assist with economic substance compliance matters. AGS offers registered office, director and fiduciary services, as well as assistance in meeting statutory requirements in respect of record keeping, reporting and filing. We are pleased to offer our clients both legal advice and corporate solutions to meet your needs in a single cost-effective and joined-up service.
Does the Entity carry on financing business?
An entity engages in financing business if it provides funds, other than by way of subscription for shares or other equity contributions, for the business activities of one or more other entities (whether or not affiliated).
Yes
No
Unsure
Your responses indicate that the Entity is carrying on the Relevant Activity of financing and is therefore within scope of the Economic Substance regime in Bermuda. To satisfy the economic substance requirements, the Entity's core income-generating activities, with respect to the Relevant Activity, must be undertaken in Bermuda.
Where the Entity outsources any or all of its core income-generating activities to an affiliate or service provider, the core income-generating activities so outsourced must be undertaken in Bermuda.
Core Income-Generating Activities
The core income-generating activities of an Entity that engages in financing include the following:
(a) agreeing funding terms;
(b) setting the terms and duration of any financing;
(c) monitoring and revising agreements; and
(d) managing risk associated with such agreements.
Economic Substance Requirements
An Entity complies with the economic substance requirements if:
(a) it is managed and directed in Bermuda;
(b) core income-generating activities (as may be prescribed) are undertaken in Bermuda with respect to the Relevant Activity;
(c) it maintains adequate physical premises in Bermuda;
(d) there are adequate full time employees in Bermuda with suitable qualifications; and
(e) there is adequate operating expenditure incurred in Bermuda in relation to the Relevant Activity.
Managed and Directed
Whether an Entity is being managed and directed in or from Bermuda will be determined having regard to:
(a) the location of strategic or risk management and operational decision-making or where the management of the Entity meets to make decisions regarding business activities;
(b) the presence of an adequate number of senior executives, employees or other persons in Bermuda who are suitably qualified and responsible for oversight or execution of its core income-generating activities or both;
(c) the location of board meetings (or managers' or partners' meetings, as the case may be) and the nature and frequency of those meetings held in Bermuda in relation to the overall number of meetings.
Adequacy
"Adequacy" has its ordinary dictionary meaning. It means "enough or satisfactory for a particular purpose". What will be adequate for each Entity to comply with the economic substance requirements in respect of its Relevant Activity(ies) will depend on the particular facts of the Entity and Relevant Activity having regard to the nature, scale, and complexity of the Entity and / or the Relevant Activity undertaken.
Interpretation of Terms
The information provided above includes certain terms that are defined in the legislation or expanded upon in supplemental materials, and others that are legal terms of art that may not directly reflect their ordinary meaning. The correct interpretation of these terms is essential to ensure that the analysis is accurate. For that reason, legal advice should be taken on the legislation and its application to your particular business.
Other Relevant Activities
It is not uncommon for an Entity to undertake more than one Relevant Activity. For example, an entity conducting financing may also be conducting distribution and service centre business
, headquarters business
, leasing business
, intellectual property business
or holding company business
. Where an Entity conducts more than one Relevant Activity, the applicable economic substance test will have to be met in respect of each one.
Actions to Take
We recommend that you
click here
to book a call with one of our legal experts.
You should also be aware that our affiliated group of companies, Appleby Global Services (
AGS
) in Bermuda, Cayman, Jersey and Isle of Man, stands ready to assist with economic substance compliance matters. AGS offers registered office, director and fiduciary services, as well as assistance in meeting statutory requirements in respect of record keeping, reporting and filing. We are pleased to offer our clients both legal advice and corporate solutions to meet your needs in a single cost-effective and joined-up service.
Does the Entity carry on leasing business?
An entity engages in leasing business if it provides leasing arrangements in respect of which it is the lessor of one or more assets leased to one or more affiliates or third parties.
Yes
No
Unsure
Your responses indicate that the Entity is carrying on the Relevant Activity of leasing and is therefore within scope of the Economic Substance regime. To satisfy the economic substance requirements, the Entity's core income-generating activities, with respect to the Relevant Activity, must be undertaken in Bermuda.
Where the Entity outsources any or all of its core income-generating activities to an affiliate or service provider, core income-generating activities so outsourced must be undertaken in Bermuda.
Core Income-Generating Activities
The core income-generating activities of an Entity that engages in leasing include the following:
(a) identifying and acquiring assets to be leased;
(b) setting the terms and duration of any leasing;
(c) monitoring and revising agreements; and
(d) managing any risk associated with such agreements.
Economic Substance Requirements
An Entity complies with economic substance requirements if:
(a) it is managed and directed in Bermuda;
(b) core income-generating activities (as may be prescribed) are undertaken in Bermuda with respect to the Relevant Activity;
(c) it maintains adequate physical premises in Bermuda;
(d) there are adequate full time employees in Bermuda with suitable qualifications; and
(e) there is adequate operating expenditure incurred in Bermuda in relation to the Relevant Activity.
Managed and Directed
Whether an Entity is being managed and directed in Bermuda or from Bermuda, will be determined having regard to:
(a) the location of strategic or risk management and operational decision-making or where the management of the Entity meets to make decisions regarding business activities;
(b) the presence of an adequate number of senior executives, employees or other persons in Bermuda who are suitably qualified and responsible for oversight or execution of its core income-generating activities or both;
(c) the location of board meetings (or managers' or partners meetings, as the case may be) and the nature and frequency of those meetings held in Bermuda in relation to the overall number of meetings.
Adequacy
"Adequacy" has its ordinary dictionary meaning. It means "enough or satisfactory for a particular purpose". What will be adequate for each Entity to comply with the economic substance requirements in respect of its Relevant Activity(ies) will depend on the particular facts of the Entity and Relevant Activity, having regard to the nature, scale, and complexity of the Entity and / or the Relevant Activity undertaken.
Interpretation of Terms
The information provided above includes certain terms that are defined in the legislation or expanded upon in supplemental materials, and others that are legal terms of art that may not directly reflect their ordinary meaning. The correct interpretation of these terms is essential to ensure that the analysis is accurate. For that reason, legal advice should be taken on the legislation and its application to your particular business.
Other Relevant Activities
It is not uncommon for an Entity to undertake more than one Relevant Activity. For example, an entity conducting leasing may also be conducting distribution and service centre business
, headquarters business
, financing business
, intellectual property business
or holding company business
. Where an Entity conducts more than one Relevant Activity, the applicable economic substance test will have to be met in respect of each one.
Actions to Take
We recommend that you
click here
to book a call with one of our legal experts.
You should also be aware that our affiliated group of companies, Appleby Global Services (
AGS
) in Bermuda, Cayman, Jersey and Isle of Man, stands ready to assist with economic substance compliance matters. AGS offers registered office, director and fiduciary services, as well as assistance in meeting statutory requirements in respect of record keeping, reporting and filing. We are pleased to offer our clients both legal advice and corporate solutions to meet your needs in a single cost-effective and joined-up service.
Does the Entity carry on fund management business?
An entity engages in fund management if it manages investments
for funds in respect of which a licence is required in accordance with the Investment Business Act 2003, or for which a licence would be required if such activity were taking place in Bermuda.
Yes
No
Unsure
Your responses indicate that the Entity is carrying on the Relevant Activity of fund management and is therefore within scope of the Economic Substance regime. To satisfy the economic substance requirements, the Entity's core income-generating activities, with respect to the Relevant Activity, must be undertaken in Bermuda.
Where the Entity outsources any or all of its core income-generating activities to an affiliate or service provider, the core income-generating activities so outsourced must be undertaken in Bermuda.
Core Income-Generating Activities
The core income-generating activities of an Entity that engages in fund management include the following:
(a) taking decisions on the holding and selling of investments;
(b) calculating risk and reserves;
(c) taking decisions on currency or interest fluctuations and hedging positions; and
(d) preparing relevant regulatory or other reports for government authorities and investors.
Economic Substance Requirements
An Entity complies with the economic substance requirements if:
(a) it is managed and directed in Bermuda;
(b) core income-generating activities (as may be prescribed) are undertaken in Bermuda with respect to the Relevant Activity;
(c) it maintains adequate physical premises in Bermuda;
(d) there are adequate full time employees in Bermuda with suitable qualifications; and
(e) there is adequate operating expenditure incurred in Bermuda in relation to the Relevant Activity.
Managed and Directed
Whether an Entity is being managed and directed in Bermuda or from Bermuda, will be determined having regard to:
(a) the location of strategic or risk management and operational decision-making or where the management of the Entity meets to make decisions regarding business activities;
(b) the presence of an adequate number of senior executives, employees or other persons in Bermuda who are suitably qualified and responsible for oversight or execution of its core income-generating activities or both;
(c) the location of board meetings (or managers' or partners' meetings, as the case may be) and the nature and frequency of those meetings held in Bermuda in relation to the overall number of meetings.
Adequacy
"Adequacy" has its ordinary dictionary meaning. It means "enough or satisfactory for a particular purpose". What will be adequate for each Entity to comply with the economic substance requirements in respect of its Relevant Activity(ies) will depend on the particular facts of the Entity and Relevant Activity, having regard to the nature, scale, and complexity of the Entity and / or the Relevant Activity undertaken.
Interpretation of Terms
The information provided above includes certain terms that are defined in the legislation or expanded upon in supplemental materials, and others that are legal terms of art that may not directly reflect their ordinary meaning. The correct interpretation of these terms is essential to ensure that the analysis is accurate. For that reason, legal advice should be taken on the legislation and its application to your particular business.
Actions to Take
We recommend that you
click here
to book a call with one of our legal experts.
You should also be aware that our affiliated group of companies, Appleby Global Services (
AGS
) in Bermuda, Cayman, Jersey and Isle of Man, stands ready to assist with economic substance compliance matters. AGS offers registered office, director and fiduciary services, as well as assistance in meeting statutory requirements in respect of record keeping, reporting and filing. We are pleased to offer our clients both legal advice and corporate solutions to meet your needs in a single cost-effective and joined-up service.
Does the Entity carry on headquarters business?
An entity engages in business as a headquarters if the entity engages in the general management and administration of its affiliates within or outside of Bermuda.
Yes
No
Unsure
Your responses indicate that the Entity is carrying on the Relevant Activity of headquarters business and is therefore within scope of the Economic Substance regime in Bermuda. To satisfy the economic substance requirements, the Entity's core income-generating activities, with respect to the Relevant Activity, must be undertaken in Bermuda.
Where the Entity outsources any or all of its core income-generating activities to an affiliate or service provider, the core income-generating activities so outsourced must be undertaken in Bermuda.
Core Income-Generating Activities
The core income-generating activities of an Entity engaged in business as a headquarters include the following:
(a) taking relevant strategic or management decisions;
(b) incurring expenditures on behalf of affiliates; and
(c) coordinating group activities.
Economic Substance Requirements
An Entity complies with the economic substance requirements if:
(a) it is managed and directed in Bermuda;
(b) core income-generating activities (as may be prescribed) are undertaken in Bermuda with respect to the Relevant Activity;
(c) it maintains adequate physical premises in Bermuda;
(d) there are adequate full time employees in Bermuda with suitable qualifications; and
(e) there is adequate operating expenditure incurred in Bermuda in relation to the Relevant Activity.
Managed and Directed
Whether an Entity is being managed and directed in Bermuda or from Bermuda, will be determined having regard to:
(a) the location of strategic or risk management and operational decision-making or where the management of the Entity meets to make decisions regarding business activities;
(b) the presence of an adequate number of senior executives, employees or other persons in Bermuda who are suitably qualified and responsible for oversight or execution of its core income-generating activities or both;
(c) the location of board meetings (or managers' or partners' meetings, as the case may be) and the nature and frequency of those meetings held in Bermuda in relation to the overall number of meetings.
Adequacy
"Adequacy" has its ordinary dictionary meaning. It means "enough or satisfactory for a particular purpose". What will be adequate for each Entity to comply with the economic substance requirements in respect of its Relevant Activity(ies) will depend on the particular facts of the Entity and Relevant Activity having regard to the nature, scale, and complexity of the Entity and / or the Relevant Activity undertaken.
Interpretation of Terms
The information provided above includes certain terms that are defined in the legislation or expanded upon in supplemental materials, and others that are legal terms of art that may not directly reflect their ordinary meaning. The correct interpretation of these terms is essential to ensure that the analysis is accurate. For that reason, legal advice should be taken on the legislation and its application to your particular business.
Other Relevant Activities
It is not uncommon for an Entity to undertake more than one Relevant Activity. For example, an entity conducting headquarters business may also be conducting distribution and service centre business
, financing and leasing business
, intellectual property business
or holding company business
. Where an Entity conducts more than one Relevant Activity, the applicable economic substance test will have to be met in respect of each one.
Actions to Take
We recommend that you
click here
to book a call with one of our legal experts.
You should also be aware that our affiliated group of companies, Appleby Global Services (
AGS
) in Bermuda, Cayman, Jersey and Isle of Man, stands ready to assist with economic substance compliance matters. AGS offers registered office, director and fiduciary services, as well as assistance in meeting statutory requirements in respect of record keeping, reporting and filing. We are pleased to offer our clients both legal advice and corporate solutions to meet your needs in a single cost-effective and joined-up service.
Does the Entity carry on insurance business?
An entity engages in insurance if it engages in business
for which registration is required in accordance with the Insurance Act 1978.
Yes
No
Unsure
Your responses indicate that the Entity is carrying on the Relevant Activity of insurance business and is therefore within scope of the Economic Substance regime in Bermuda. To satisfy the economic substance requirements, the Entity's core income-generating activities, with respect to the Relevant Activity, must be undertaken in Bermuda.
Where the Entity outsources any or all of its core income-generating activities to an affiliate or service provider, the core income-generating activities so outsourced must be undertaken in Bermuda.
Core Income-Generating Activities
The core income-generating activities of an Entity engaged in insurance include the following:
(a) predicting and calculating risk;
(b) insuring or re-insuring against risk;
(c) providing client services; and
(d) preparing regulatory reports.
Economic Substance Requirements
An Entity engaged in insurance business complies with the economic substance requirements where it complies with the applicable requirements in section 3 of the Economic Substance Act 2018 and regulation 3 of the Economic Substance Regulations 2018 as set forth:
(a) in the Companies Act 1981 relating to corporate governance;
(b) and in the Insurance Act 1978, regulations, rules or other instruments (including the code of conduct) made under the Insurance Act 1978.
Adequacy
"Adequacy" has its ordinary dictionary meaning. It means "enough or satisfactory for a particular purpose". What will be adequate for each Entity to comply with the economic substance requirements in respect of its Relevant Activity(ies) will depend on the particular facts of the Entity and Relevant Activity, having regard to the nature, scale, and complexity of the Entity and / or the Relevant Activity undertaken.
Interpretation of Terms
The information provided above includes certain terms that are defined in the legislation or expanded upon in supplemental materials, and others that are legal terms of art that may not directly reflect their ordinary meaning. The correct interpretation of these terms is essential to ensure that the analysis is accurate. For that reason, legal advice should be taken on the legislation and its application to your particular business.
Actions to Take
We recommend that you
click here
to book a call with one of our legal experts.
You should also be aware that our affiliated group of companies, Appleby Global Services (
AGS
) in Bermuda, Cayman, Jersey and Isle of Man, stands ready to assist with economic substance compliance matters. AGS offers registered office, director and fiduciary services, as well as assistance in meeting statutory requirements in respect of record keeping, reporting and filing. We are pleased to offer our clients both legal advice and corporate solutions to meet your needs in a single cost-effective and joined-up service.
Does the Entity carry on shipping business?
An entity engages in shipping if it engages in the ownership, leasing, operation or management of a ship that is used to transport goods.
Yes
No
Unsure
Your responses indicate that the Entity is carrying on the Relevant Activity of shipping and is therefore within scope of the Economic Substance regime in Bermuda. To satisfy the economic substance requirements, the Entity's core income-generating activities, with respect to the Relevant Activity, must be undertaken in Bermuda.
Where the Entity outsources any or all of its core income-generating activities to an affiliate or service provider, the core income-generating activities so outsourced must be undertaken in Bermuda.
Core Income-Generating Activities
The core income-generating activities of an Entity engaged in shipping include the following:
(a) managing the crew (including hiring, paying and overseeing crew members);
(b) hauling and maintaining ships;
(c) overseeing and tracking deliveries;
(d) determining what goods to order and when to deliver them; and
(e) organising and overseeing voyages.
Economic Substance Requirements
An Entity complies with the economic substance requirements if:
(a) it is managed and directed in Bermuda;
(b) core income-generating activities (as may be prescribed) are undertaken in Bermuda with respect to the Relevant Activity;
(c) it maintains adequate physical premises in Bermuda;
(d) there are adequate full time employees in Bermuda with suitable qualifications; and
(e) there is adequate operating expenditure incurred in Bermuda in relation to the Relevant Activity.
Managed and Directed
Whether an Entity is being managed and directed in Bermuda or from Bermuda, will be determined having regard to:
(a) the location of strategic or risk management and operational decision-making or where the management of the Entity meets to make decisions regarding business activities;
(b) the presence of an adequate number of senior executives, employees or other persons in Bermuda who are suitably qualified and responsible for oversight or execution of its core income-generating activities or both;
(c) the location of board meetings (or managers' or partners' meetings, as the case may be) and the nature and frequency of those meetings held in Bermuda in relation to the overall number of meetings.
Adequacy
"Adequacy" has its ordinary dictionary meaning. It means "enough or satisfactory for a particular purpose". What will be adequate for each Entity to comply with the economic substance requirements in respect of its Relevant Activity(ies) will depend on the particular facts of the Entity and Relevant Activity having regard to the nature, scale, and complexity of the Entity and / or the Relevant Activity undertaken.
Interpretation of Terms
The information provided above includes certain terms that are defined in the legislation or expanded upon in supplemental materials, and others that are legal terms of art that may not directly reflect their ordinary meaning. The correct interpretation of these terms is essential to ensure that the analysis is accurate. For that reason, legal advice should be taken on the legislation and its application to your particular business.
Actions to Take
We recommend that you
click here
to book a call with one of our legal experts.
You should also be aware that our affiliated group of companies, Appleby Global Services (
AGS
) in Bermuda, Cayman, Jersey and Isle of Man, stands ready to assist with economic substance compliance matters. AGS offers registered office, director and fiduciary services, as well as assistance in meeting statutory requirements in respect of record keeping, reporting and filing. We are pleased to offer our clients both legal advice and corporate solutions to meet your needs in a single cost-effective and joined-up service.
Does the Entity carry on intellectual property business?
An entity engages in intellectual property business if the entity engages in the exploitation of Intellectual Property assets
(including non-trade intangible assets).
Yes
No
Unsure
Your responses indicate that the Entity is carrying on the Relevant Activity of intellectual property business and is therefore within scope of the Economic Substance regime. To satisfy the economic substance requirements, the Entity's core income-generating activities, with respect to the Relevant Activity, must be undertaken in Bermuda.
Where the Entity outsources any or all of its core income-generating activities to an affiliate or service provider, the core income-generating activities so outsourced must be undertaken in Bermuda.
Core Income-Generating Activities
The core income-generating activities associated with an intangible asset will depend on the following:
(a) the nature of the IP asset, that is to say, whether it is a patent, technical know-how, trademark, customer lists or brand or goodwill; and
(b) how the IP asset is being used to generate income for the Entity.
The core income-generating activities for entities engaged in intellectual property activities include the following:
(a) conducting research and development in relation to IP assets, such as patents;
(b) marketing, branding and distribution of non-trade intangible assets, such as trademarks;
(c) taking the strategic decisions and managing and bearing the principal risks related to the development and subsequent exploitation of an IP asset;
(d) taking the strategic decisions and managing and bearing the principal risks related to any third party acquisition and subsequent exploitation of an IP asset; and
(e) carrying on the underlying trading activities through which IP assets are exploited and which lead to the generation of income from third parties.
Economic Substance Requirements
Where an Entity engaged in IP business owns an IP asset that:
(a) was developed or created by the Entity; or
(b) has been acquired from an Entity other than an affiliate; and
(c) is licensed to an Entity other than an affiliate, the following paragraph applies.
Where such Entity's IP core income-generating activities (as set forth in regulation 15(3)(a) and (b)
of the Economic Substance Regulations 2018) are not undertaken in Bermuda during a relevant financial period, there is a rebuttable presumption that the Entity does not comply with the economic substance requirements.
High risk IP Activities
An Entity engages in high-risk IP activities where the Entity owns an IP asset that:
(a) has been acquired from an affiliate or has been obtained through the funding of overseas research and development activities; and
(b) is licensed to a foreign affiliate or is used to generate IP income through activities performed by such foreign affiliate,
Note that if the Entity conducts "high-risk IP activities" the test is more stringent and there is a stronger evidentiary threshold.
Adequacy
"Adequacy" has its ordinary dictionary meaning. It means "enough or satisfactory for a particular purpose". What will be adequate for each Entity to comply with the economic substance requirements in respect of its Relevant Activity(ies) will depend on the particular facts of the Entity and Relevant Activity, having regard to the nature, scale, and complexity of the Entity and / or the Relevant Activity undertaken.
Interpretation of Terms
The information provided above includes certain terms that are defined in the legislation or expanded upon in supplemental materials, and others that are legal terms of art that may not directly reflect their ordinary meaning. The correct interpretation of these terms is essential to ensure that the analysis is accurate. For that reason, legal advice should be taken on the legislation and its application to your particular business.
Other Relevant Activities
It is not uncommon for an Entity to undertake more than one Relevant Activity. For example, an entity conducting intellectual property business may also be conducting distribution and service centre business
, financing and leasing business
, headquarters business
or holding company business
. Where an Entity conducts more than one Relevant Activity, the applicable economic substance test will have to be met in respect of each one.
Actions to Take
We recommend that you
click here
to book a call with one of our legal experts.
You should also be aware that our affiliated group of companies, Appleby Global Services (
AGS
) in Bermuda, Cayman, Jersey and Isle of Man, stands ready to assist with economic substance compliance matters. AGS offers registered office, director and fiduciary services, as well as assistance in meeting statutory requirements in respect of record keeping, reporting and filing. We are pleased to offer our clients both legal advice and corporate solutions to meet your needs in a single cost-effective and joined-up service.
Does the Entity carry on holding company business?
An entity engages in business as a holding entity if it engages in activities including holding or managing any assets or equity participations.
Yes
No
Unsure
Your responses indicated that the Entity is carrying on holding company business. To satisfy the economic substance requirements, the Entity's core income-generating activities, with respect to the Relevant Activity, must be undertaken in Bermuda.
Core Income-Generating Activities
For a holding Entity that holds a variety of assets and earns different types of income (such as interest, rents and royalties), the core income-generating activities are those activities associated with the income that the holding company earns.
Economic Substance Requirements
An Entity complies with the economic substance requirements if:
(a) it is managed and directed in Bermuda;
(b) core income-generating activities (as may be prescribed) are undertaken in Bermuda with respect to the Relevant Activity;
(c) it maintains adequate physical premises in Bermuda;
(d) there are adequate full time employees in Bermuda with suitable qualifications; and
(e) there is adequate operating expenditure incurred in Bermuda in relation to the Relevant Activity.
Managed and Directed
Whether an Entity is being managed and directed in Bermuda or from Bermuda, will be determined having regard to:
(a) the location of strategic or risk management and operational decision-making or where the management of the Entity meets to make decisions regarding business activities;
(b) the presence of an adequate number of senior executives, employees or other persons in Bermuda who are suitably qualified and responsible for oversight or execution of its core income-generating activities or both;
(c) the location of board meetings (or managers' or partners' meetings, as the case may be) and the nature and frequency of those meetings held in Bermuda in relation to the overall number of meetings.
Interpretation of Terms
The information provided above includes certain terms that are defined in the legislation or expanded upon in supplemental materials, and others that are legal terms of art that may not directly reflect their ordinary meaning. The correct interpretation of these terms is essential to ensure that the analysis is accurate. For that reason, legal advice should be taken on the legislation and its application to your particular business.
Other Relevant Activities
It is not uncommon for an Entity to undertake more than one Relevant Activity. For example, an entity conducting holding company business may also be conducting distribution and service centre business
, financing and leasing business
, headquarters business
or intellectual property company business
. Where an Entity conducts more than one Relevant Activity, the applicable economic substance test will have to be met in respect of each one.
Actions to Take
We recommend that you
click here
to book a call with one of our legal experts.
You should also be aware that our affiliated group of companies, Appleby Global Services (
AGS
) in Bermuda, Cayman, Jersey and Isle of Man, stands ready to assist with economic substance compliance matters. AGS offers registered office, director and fiduciary services, as well as assistance in meeting statutory requirements in respect of record keeping, reporting and filing. We are pleased to offer our clients both legal advice and corporate solutions to meet your needs in a single cost-effective and joined-up service.
Is the Entity a "pure equity holding entity"?
A holding entity is a "pure equity holding entity" where it only holds or manages equity participations, and earns passive income from dividends, distributions, capital gains or other incidental income only.
Yes
No
Unsure
Your responses indicated that the Entity is a pure equity holding entity. A pure equity holding entity that is engaged in a Relevant Activity complies with the economic substance requirements if the Entity:
(a) complies with minimum economic substance requirements; and
(b) has adequate employees for holding and managing equity participations, and adequate premises in Bermuda.
Minimum Economic Substance Requirements
The minimum economic substance requirements to be applied are:
(a) compliance with applicable corporate governance requirements set forth in the Companies Act, the Limited Liability Company Act 2016 and Partnerships Acts including keeping records of account, books and papers and financial statements; and
(b) submission of an annual economic substance declaration form.
Interpretation of Terms
The information provided above includes certain terms that are defined in the legislation or expanded upon in supplemental materials, and others that are legal terms of art that may not directly reflect their ordinary meaning. The correct interpretation of these terms is essential to ensure that the analysis is accurate. For that reason, legal advice should be taken on the legislation and its application to your particular business.
Actions to Take
We recommend that you
click here
to book a call with one of our legal experts.
You should also be aware that our affiliated group of companies, Appleby Global Services (
AGS
) in Bermuda, Cayman, Jersey and Isle of Man, stands ready to assist with economic substance compliance matters. AGS offers registered office, director and fiduciary services, as well as assistance in meeting statutory requirements in respect of record keeping, reporting and filing. We are pleased to offer our clients both legal advice and corporate solutions to meet your needs in a single cost-effective and joined-up service.
Is the Entity a local entity
(not carrying out insurance or banking business)?
Yes
No
Unsure
Your responses indicated that the Entity is a local company (not carrying out insurance or banking business). A local company (not carrying out insurance or banking business) that is engaged in a Relevant Activity complies with the economic substance requirements if the Entity complies with the minimum economic substance requirements.
Minimum Economic Substance Requirements
The minimum economic substance requirements to be applied are:
(a) compliance with applicable corporate governance requirements set forth in the Companies Act, the Limited Liability Company Act 2016 and Partnerships Acts including keeping records of account, books and papers and financial statements; and
(b) submission of an annual economic substance declaration form.
Interpretation of Terms
The information provided above includes certain terms that are defined in the legislation or expanded upon in supplemental materials, and others that are legal terms of art that may not directly reflect their ordinary meaning. The correct interpretation of these terms is essential to ensure that the analysis is accurate. For that reason, legal advice should be taken on the legislation and its application to your particular business.
Actions to Take
We recommend that you
click here
to book a call with one of our legal experts.
You should also be aware that our affiliated group of companies, Appleby Global Services (
AGS
) in Bermuda, Cayman, Jersey and Isle of Man, stands ready to assist with economic substance compliance matters. AGS offers registered office, director and fiduciary services, as well as assistance in meeting statutory requirements in respect of record keeping, reporting and filing. We are pleased to offer our clients both legal advice and corporate solutions to meet your needs in a single cost-effective and joined-up service.
Although the Entity is of a type that could be within the scope of the legislation, your responses indicate that the business does not carry on a Relevant Activity and on that basis compliance with the Economic Substance regime in Bermuda is not required. Please note, however, that this conclusion depends on your responses being accurate in all respects, which we have not been able to verify. We caution that the information provided above includes certain terms that are defined in the legislation or expanded upon in supplemental materials, and others that are legal terms of art that may not directly reflect their ordinary meaning. The correct interpretation of these terms is essential to ensure that the analysis is accurate. For that reason, legal advice should be taken on the legislation and its application to your particular business.
Actions to Take
We recommend that you
click here
to book a call with one of our legal experts.
You should also be aware that our affiliated group of companies, Appleby Global Services (
AGS
) in Bermuda, Cayman, Jersey and Isle of Man, stands ready to assist with economic substance compliance matters. AGS offers registered office, director and fiduciary services, as well as assistance in meeting statutory requirements in respect of record keeping, reporting and filing. We are pleased to offer our clients both legal advice and corporate solutions to meet your needs in a single cost-effective and joined-up service.
You have selected "Unsure" for one or more answers in Section 3.
In order to determine whether the Entity carries on the Relevant Activity, it will be necessary for us to obtain full information on the day-to-day business activities of the Entity and consider the Entity's core income-generating activities.
Actions to Take
We recommend that you
click here
to book a call with one of our legal experts.
You should also be aware that our affiliated group of companies, Appleby Global Services (
AGS
) in Bermuda, Cayman, Jersey and Isle of Man, stands ready to assist with economic substance compliance matters. AGS offers registered office, director and fiduciary services, as well as assistance in meeting statutory requirements in respect of record keeping, reporting and filing. We are pleased to offer our clients both legal advice and corporate solutions to meet your needs in a single cost-effective and joined-up service.
EU List of Non-Cooperative Jurisdictions
×
As of 21 June 2019, the
EU list of non-cooperative jurisdictions
is composed of: American Samoa, Belize, Fiji, Guam, Marshall Islands, Oman, Samoa, Trinidad and Tobago, United Arab Emirates, US Virgin Islands, and Vanuatu.
Managing Investments
×
For the purposes of the above, "managing investments" has the meaning given in the Investment Business Act 2003: Managing or offering, or agreeing to manage, assets belonging to another person where those assets consist of or include investments.
Insurance Business
×
Insurance business, as defined in section 1 of the Insurance Act 1978, "means the business of effecting and carrying out contracts - (a) protecting persons against loss or liability to loss in respect of risks to which such persons may be exposed; or (b) to pay a sum of money or render money's worth upon the happening of an event, and includes re-insurance business".
Intellectual Property Assets
×
IP assets, as defined in section 2 of the Economic Substance Regulations 2018, "means intellectual property rights held by an entity in relation to an intangible asset which includes patents, copyright, technical know-how, trademark, brand or goodwill that generate IP income". IP income, as defined in section 2 of the Economic Substance Regulations 2018, "means income which accrues to the business from IP assets and IP activities (such income being separately identifiable from any income-generated from any tangible asset)".
Regulation 15(3)(a) and 15(3)(b)
×
Regulation 15(3)(a) is conducting research and development in relation to IP assets, such as patents. Regulation 15(3)(b) is marketing, branding and distribution of non-trade intangible assets, such as trademarks
Local Entity
×
"Local entity" means a local company, a local LLC or a local partnership. "Local partnership" means a partnership which is not registered as an exempted partnership, carries on business only in Bermuda and which is not part of an MNE group.
Distribution Business
×
An entity engages in business as a distribution centre if it engages in the resale of goods purchased from a foreign affiliate.
Service Centre Business
×
An entity engages in business as a service centre if it primarily provides consulting or administrative services to a foreign affiliate.
Distribution and Service Centre Business
×
An entity engages in business as a distribution centre if it engages in the resale of goods purchased from a foreign affiliate.
An entity engages in business as a service centre if it primarily provides consulting or administrative services to a foreign affiliate.
Headquarters Business
×
An entity engages in business as a headquarters if the entity engages in the general management and administration of its affiliates within or outside of Bermuda.
Financing Business
×
An entity engages in financing business if it provides funds, other than by way of subscription for shares or other equity contributions, for the business activities of one or more other entities (whether or not affiliated).
Leasing Business
×
An entity engages in leasing business if it provides leasing arrangements in respect of which it is the lessor of one or more assets leased to one or more affiliates or third parties.
Financing and Leasing Business
×
An entity engages in financing business if it provides funds, other than by way of subscription for shares or other equity contributions, for the business activities of one or more other entities (whether or not affiliated).
An entity engages in leasing business if it provides leasing arrangements in respect of which it is the lessor of one or more assets leased to one or more affiliates or third parties.
Intellectual Property Business
×
An entity engages in intellectual property business if the entity engages in the exploitation of Intellectual Property assets
1
(including non-trade intangible assets).
1
IP assets, as defined in section 2 of the Economic Substance Regulations 2018, "means intellectual property rights held by an entity in relation to an intangible asset which includes patents, copyright, technical know-how, trademark, brand or goodwill that generate IP income". IP income, as defined in section 2 of the Economic Substance Regulations 2018, "means income which accrues to the business from IP assets and IP activities (such income being separately identifiable from any income-generated from any tangible asset)".
Holding Company Business
×
An entity engages in business as a holding entity if it engages in activities including holding or managing any assets or equity participations.