As set out in our previous client alert, the Economic Substance Act 2018 and the Economic Substance Regulations 2018 came into force in Bermuda at the end of 2018. On 22 February 2019, following further discussions with the European Union, the Bermuda Government made a number of amendments to certain key regulations.
The amendments were generally clarifying in nature, but some of the more significant amendments include:
- the addition of new definitions of “holding entity” and “intellectual property” as relevant activities, including description of the core income generating activities for such entities; and
- changes to the enhanced IP economic substance requirements, including in relation to “high risk IP activities”.
Attached is a revised Appendix 2 from our original client alert, incorporating the changes to the relevant definitions and core income generating activities. Registered entities which believe they may be undertaking IP business should seek legal advice regarding the changes to enhanced IP economic substance requirements.
The EU continues its process of reviewing Bermuda’s economic substance legislation, and the legislation enacted by other jurisdictions. The final decision as to whether or to what extent the legislation meets the EU’s requirements is expected before the end of Q1 2019. Following that decision, additional amendments may be made to Bermuda’s legislation to bring it into line with that of other jurisdictions. Any such changes will be the subject of future client bulletins.
How can we help?
We recognise that this legislation will in some cases require changes to existing business models. Conyers Dill & Pearman is ready to assist clients in understanding their obligations under the legislation and in implementing any such changes that may be required.
For further information, please contact one of our lawyers listed below or your usual Conyers lawyer.