Prior to this amendment, all Bermuda companies, permit companies and limited liability companies were in scope of the economic substance regime, but only those partnerships that elected to have separate legal personality, were required to comply with the economic substance requirements if they were carrying on a relevant activity2. However, with the enactment of these amendments, all Bermuda partnerships3 and overseas partnerships registered in Bermuda that are carrying on a relevant activity are now required to satisfy the economic substance requirements, irrespective of whether such partnerships have elected to have separate legal personality.
All partnerships formed and/or registered in Bermuda on or after 1 July 2021 carrying on or expecting to carry on a relevant activity are immediately subject to the economic substance requirements. However, partnerships that were not previously in scope of the Economic Substance Act 2018, but which were formed and/or registered in Bermuda on or prior to 30 June 2021, and are carrying on a relevant activity, will be subject to the economic substance requirements from 1 January 2022. Their first economic substance declaration therefore must be filed in respect of relevant periods ending on or after 31 December 2022.
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Economic Substance Requirements to Apply to ALL Bermuda Partnerships
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 centre; intellectual property; and holding entity.
2 Economic substance requirements do not apply to such entities that can provide evidence of their residence for tax purposes in a jurisdiction outside Bermuda that is not listed in Annex 1 to the European Union’s list of non-cooperative jurisdictions for tax purposes.
3 Includes partnerships to which the Partnership Act 1902 applies, limited partnerships, exempted partnerships, and exempted limited partnerships