BVI legal entities are required to make an annual economic substance filing. A large number of BVI entities carry on passive holding business. As a result of recent changes to the Economic Substance Guidance Notes, the questions in the economic substance portal have expanded for these entities. This client bulletin highlights the additional questions being asked of entities carrying on passive holding business1.

Key changes

The following are the additional questions in the economic substance portal for entities carrying on passive holding business:

  • taxpayer identification number (TIN), if any;
  • name, jurisdiction of incorporation, incorporation number and TIN or other identification reference of each immediate and ultimate parent entity2;
  • reporting currency;
  • amount and type of gross income3;
  • amount of expenditures during the relevant period, both total, relevant to holding business and incurred within the BVI; and
  • if part of an MNE Group4, the name of the group.

 Brokerage Accounts

A welcome change in the guidance notes is that the notes make clear that holders of brokerage accounts which do not directly hold or manage equity participations or shares are not carrying on holding business as their only asset is a claim against the broker, and not the shares themselves.

If you need advice regarding how the economic substance rules might apply to your BVI entity, please get in touch with your usual Conyers contact or alternatively contact the authors below.


1 An entity carrying on passive holding business only holds shares or other forms of equity, which are not actively managed. The ownership of any other asset (such as bonds, government securities, real property) will generally take the entity outside of the definition of holding business.

2 “Parent” refers to holding, directly or indirectly, 75% or more of the shares or votes of an entity.

3 In our view, a passive holding business that has not received any dividends or sold any equity during the relevant period likely has a gross income of zero.  For a holding business, the “type” of income is typically dividends or capital gains.

3 An MNE Group is a collection of enterprises related through ownership or control with annual consolidated group revenue of not less than €750 million.


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