It is well known by now that the British Virgin Islands (“BVI”) enacted The Economic Substance (Companies and Limited Partnerships) Act 2018 (“the Act”) with effect from 1 January 2019. In brief, this new law requires certain reporting obligations as well as the establishment of relevant and adequate ‘economic substance’ for BVI companies and limited partnerships that are resident in the BVI and carry on ‘relevant activity’. Failure to comply with the Act can result in significant penalties and potential strike-off of the company. You can read more by clicking here.
Actions needed from a BVI perspectiveWith this new Act well into place, all BVI companies and affected legal entities would be expected to do the following before the end of 2019:
- Obtain relevant professional guidance and/or legal advice as to the extent that the entity is affected by the Act.
- Clearly identify how the entity is determined and classified within the context of the Act.
- Document the basis and reasons of such assessment in such a way that would satisfy the relevant BVI regulatory authority.
- Where necessary, to implement various substance related elements in BVI in such a way to make the company compliant with the Act.
How can Totalserve assist?
- Whereas Totalserve cannot directly provide BVI legal advice nor confirm whether any selected level of substance is adequate, for certain cases it can give a preliminary outline general guideline of whether such economic substance may need to be implemented. Where requested by the client, Totalserve can refer or act on client’s behalf to the obtaining of proper BVI legal advice for each case.
- Totalserve can directly assist by providing own office rooms or office spaces by way of rent, a variety of other office related facilities as well as director services and part time administrative employees in BVI.
If for whatever reason the BVI route is no longer a desired option, BVI companies can do certain other alternative actions – for which Totalserve can again fully assist with. For example:
- Be redomiciled or move their tax residency to another efficient and practical jurisdiction (e.g. Cyprus).
- Be dissolved (via restructuring) or liquidated by transferring their assets and operations (where applicable) either to their shareholders or to another existing or new entity in another jurisdiction.
You can read more about this by clicking here.
All affected persons are urged to act the soonest! For more information or assistance on any of the above please contact the Head of Corporate and Banking, Ms Melina Dionysiou at [email protected]