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British Virgin Islands (BVI) Economic Substance Requirements and Case Sharing

British Virgin Islands (BVI) Economic Substance Requirements and Case Sharing

It has been more than three years since the Economic Substance (Companies and Limited Partnerships) Act, 2018 (the “Act”) in the British Virgin Islands (BVI) came into force on 1 January 2019. Up to now, our firm has assisted our clients to file the economic substance reports and comply with the related requirements for two financial years. We would like to select the following three leading cases for your reference: -

Case One: Company A

Within the financial period, Company A provides a long-term loan to its affiliate company with interest and it is treated as carrying on a Finance and Leasing business, one of the relevant activities which fall within the scope of the Act. Therefore, Company A must meet the economic substance requirements, including but not limited to appoint a local director and have a physical address in BVI. If it fails to meet such requirements within a specified time period, it will be penalized and even be struck off the Register of Companies.

Case Two: Company B

Within the financial period, Company B provides a one-off loan, non-interest bearing. This occasional loan does not constitute a major factor in determining what kind of relevant activities Company B carries on.

Case Three: Company C

Company C has been struck off because of non-paying annual license fee, but not yet dissolved. Under the Act, the Company is required to file its economic substance report annually, until it is finally dissolved. For a struck-off company, it may be required to file its economic substance report once a year, for a maximum of 7 years.

Over more than three years of implementation, the related economic substance rules and requirements continue to be updated. For any updates, welcome to our website again.

Please note that the contents of this email are for your reference only and do not constitute any legal opinion, financial advice and tax advice. If the decision is made based on any and/or any part of the above, we shall not bear any legal and/or financial responsibility for any of and/or all consequences, damages, costs and expenses arising therefrom.

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