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Economic Substance – Preparing for Filing the First Declarations

As you will be aware, Bermuda enacted economic substance legislation requiring every company, LLC and limited partnership that has a separate legal personality which is carrying on a “relevant activity” (each, a “relevant entity”) to file an economic substance declaration form (the Declaration Form) with the Bermuda Registrar of Companies (the Registrar).  The Declaration Form must include information demonstrating that either the relevant entity: (a) has satisfied the economic substance requirements applicable to that entity, or (b) is resident for tax purposes in another jurisdiction (which is not on the European Union’s list of non-cooperative jurisdictions for tax purposes).  The Registrar will determine whether or not the applicable substance requirements are met, based on the information provided by the relevant entity.

Every relevant entity is required to file its Declaration Form no later than six months after the last day of the first financial year of that entity which commenced on or after 1 January 2019. For any such entity with a financial year which ended on 31 December 2019 and which carried on a relevant activity1 during this financial period, the filing deadline in respect of such period is 30 June 20202.

Please note:

  • The Registrar is in the process of finalising an online portal (the ESD Portal) through which you will be able to file the information required to complete the Declaration Form.
  • We are currently advised by the Registrar that the ESD Portal will be made available from around 1 May 2020. Between now and 12 May 2020 the Registrar will be offering a live webinar on how to use the ESD Portal and a separate on-demand webinar will be made available on 1 May 2020.  Attached are the registration details and we would encourage you to attend one of the sessions (Webinar Registration).
  • For an overview of the principal information that we are expecting will be required in order for you to complete your filing in respect of each registered entity, please see ESD Portal Information.

It is important also to note that the Declaration Form can only be filed via the ESD Portal and we recognise that a number of clients will need advice in connection with the filing process. Conyers has been closely involved with the implementation of Bermuda’s economic substance legislation as well as the ESD Portal, and we will be available to assist. Once we receive notice from the Registrar that the ESD Portal is available to be accessed, we will circulate the link to the ESD Portal, together with initial instructions. A dedicated Conyers team will be available to assist with your filing(s).

In the meantime, should you have any queries in connection with the filing process or require legal advice with respect to the economic substance requirements generally, please contact one of our lawyers listed below or your usual Conyers lawyer.

 

To continue reading full articles in PDF format:
Economic Substance – Preparing for Filing the First Declarations

 


Sophia Greaves
Director

Bermuda   +1 441 294 5929


Neil Henderson
Director

Bermuda   +1 441 298 7846


Jason Piney
Director

Bermuda   +1 441 299 4993


Anthony D. Whaley
Director

Bermuda   +1 441 299 4927


Graham B.R. Collis
Director, Head of Bermuda Corporate

Bermuda   +1 441 299 4965


1 “Relevant activity” means carrying on as a business any one or more of the following: banking, insurance, fund management, financing and leasing, headquarters, shipping, distribution and service centres, intellectual property and holding entity (as each term is defined in the economic substance legislation). The Registrar will consider that a “relevant activity” is being carried on as a business where the entity earns any gross income in respect of such activity during the relevant financial period.
2 Any relevant entity which fails to meet its filing deadline may be subject to sanctions imposed by the Registrar.

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