Podcasts by Category
- 20 - BVI economic substance regime updates
In this episode, Partner Joshua Mangeot and Director of Fiduciary and Custodial Kerry Graziola discuss the various amendments in 2021 to the Economic Substance (Companies and Limited Partnerships) Act (the ESA) and the Beneficial Ownership Secure Search System Act (theBOSS Act) and provide an update regarding steps being taken by the International Tax Authority (ITA) to monitor entities’ compliance.
By way of background, the BOSS Act was amended twice in 2021 – first, with effect from 1 July 2021 via the Beneficial Ownership Secure Search System (Amendment) (No. 1) Act, 2021 (the First Amendment) and the Beneficial Ownership Secure Search System (Amendment) (No. 2) Act, 2021 (the Second Amendment and together with the First Amendment the 2021 Amendments). Many of the key changes made via the First Amendment were summarised in our client update of 19 July 2021.
Key takeaways:
We expect the third version of the ITA economic substance (ES) rules and explanatory notes (the Rules) to be published later this year. We understand that publication has been delayed by the EU Commission and, as a result, the Rules do not yet reflect the 2021 Amendments.The main changes made by the Second Amendment relate to limited partnerships without legal personality (which includes foreign limited partnerships without legal personality registered in the BVI) (Relevant LPs) being added to the ES and beneficial ownership (BO) reporting regimes and expand the ES prescribed information to be reported by a “corporate and legal entity” (an Entity) for each ES financial period (FP) beginning on or after 1 January 2022.Many Relevant LPs are investment funds – and amendments to the ES Act in 2021 confirmed the industry view that “investment fund business” is not a relevant activity. Broadly, the 2021 Amendments: significantly expanded the scope of the ES reporting regime for FPs beginning on after 1 January 2022;provided that Relevant LPs must report their BO information within 15 days of identifying those matters following 1 January 2022, other than where the Relevant LP is an “exempt person” which does not carry on any ES “relevant activity” (an Exempt Person);introduced an obligation to identify, and report certain prescribed information in respect of, any “immediate parent” and “ultimate parent” (as defined) of every Entity, other than an Exempt Person; andexpanded the scope of jurisdictions which may receive information under the spontaneous information exchange mechanism in Schedule 4 to include the overseas competent authority for each state in which an immediate parent or ultimate parent of the Entity is registered.Although the first reports under the new reporting regime for most Entities incorporated or formed prior to 1 January 2019 will be filed in 2023, Entities should ensure they are aware of the new requirements now and may need to discuss the changes with their accountants and legal advisors.We are already seeing the ITA take steps to investigate entities to determine compliance. The ITA has broad investigation powers to request any information it reasonably requires from any person to determine compliance and generally has up to six years from the end of an FP to make a determination, subject to some limited exceptions.The Harneys ES Classification Solution
Our Classification Solution has already been updated to reflect the 2021 Amendments and provides a cost-effective way for BVI companies and limited partnerships to demonstrate formally that they have considered their position under the ES Act. Our automated Classification Solution helps to classify your entity, provides tailored real-time legal advice, and is accessible through our online platform, at your convenience. Classify your entity here.
If you have any questions regarding the amendments or how they may apply to your BVI entity, contact our team of economic substance specialist lawyers by emailing bvieconomicsubstance@harneys.com.
Fri, 24 Jun 2022 - 14min - 19 - ITA investigations and enforcement powers and new legislative developments
In the fourth episode of Substance on Substance season two, Philip Graham, our global head of Investment Funds and Regulatory, and Counsel Joshua Mangeot, our BVI economic substance specialist, consider the ITA’s investigation and enforcement powers under the Economic Substance (Companies and Limited Partnerships) Act 2018 and discuss some expected changes to the legislation, including limited partnerships registered in the BVI without legal personality being brought within the regime. Key takeaways Companies and other legal entities which have not yet classified themselves or which have missed their first reporting deadline (which was 30 December 2020 for the majority of BVI companies incorporated before 2019) should take urgent action. “Nil returns” are required for each financial period even where an entity did not carry on any “relevant activity”. Deadlines have not been extended despite the Covid-19 pandemic. Failure to identify relevant activity or report without reasonable cause is an offence (and offences committed by a body corporate may lead to personal liability for directors and other individuals in limited circumstances). If an entity is determined to be non-compliant with economic substance requirements, it will be liable to civil penalties and this may trigger a spontaneous exchange of its beneficial ownership and economic substance information held on the registered agent “BOSS” database with overseas competent authorities. The ITA’s investigation powers are broad and may extend to other persons associated with the entity (for example, directors, officers or the registered agent). Failure to provide information to the ITA without reasonable excuse (or the intentional provision of false information) is an offence, so we recommend that entities and their operators use this as an opportunity to ensure that books and records are up-to-date and comply with BVI law requirements. If you receive an ITA notice or information request, we recommend taking advice if you are at all uncertain. Draft legislative changes were published on Friday 12 March – we expect the drafts will be amended but it appears likely that limited partnerships registered in the BVI without legal personality will be brought within the regime (in line with EU requirements) and that there may be changes to some of the fines and penalties. Previously only limited partnerships with legal personality were affected. Our full guide regarding the ITA’s investigations and enforcement powers can be found here. This and our other client guides may need to be updated as appropriate if the legislative amendments are brought into force.
Thu, 18 Mar 2021 - 13min - 18 - Reporting criteria and tax non-residence claims
In a bumper episode for the holiday season, Phil and Josh venture into the weeds of the ES reporting requirements, giving a "deep-dive" into the reporting criteria and their long-awaited discussion of tax non-residence claims and Part 4 of the...
Fri, 27 Nov 2020 - 19min - 17 - Key points for directors as economic substance reporting deadlines approach
In the second episode of our Substance on Substance Season two, Philip Graham, our global head of Investment Funds and Regulatory, and Joshua Mangeot, our BVI Economic Substance specialist, give an update on points directors and operators of BVI...
Thu, 19 Nov 2020 - 11min - 16 - BVI economic substance reporting FAQs
Our BVI economic substance specialists Counsel Joshua Mangeot and Director of Client Services Amy Roost address some FAQs regarding the reporting process, which are relevant to all BVI companies.
Wed, 14 Oct 2020 - 11min - 15 - Our final thoughts
In the fifteenth and final episode of Harneys’ Substance on Substance series for 2019, Philip Graham and Joshua Mangeot (plus special guest George Weston) examine the journey of economic substance in the BVI to date, from the inception of the Act to the final ITA Rules and discuss how BVI entities are coming to terms with these developments.
Wed, 04 Dec 2019 - 07min - 14 - Timing of compliance and reporting obligations
In the fourteenth instalment of Harneys’ Substance on Substance series, Philip Graham and Joshua Mangeot discuss timing for compliance and reporting and address the ongoing obligation on BVI companies and other legal entities to identify “relevant activities”.
Tue, 19 Nov 2019 - 08min - 13 - What should directors and fiduciary service providers be considering?
In the thirteenth instalment of Harneys’ Substance on Substance series, Joshua Mangeot and special guest George Weston discuss BVI directors’ duties in the context of the Economic Substance (Companies and Limited Partnerships) Act 2018 (the ES Act) and provide an update on amendments to the Beneficial Ownership Secure Search System Act 2017 (the BOSS Act).
Thu, 07 Nov 2019 - 09min - 12 - Economic substance legislation and liquidations
In the twelfth instalment of Harneys’ Substance on Substance series, Philip Graham and Joshua Mangeot discuss how BVI entities currently in liquidation or considering this option should approach the BVI economic substance (ES) requirements. They also consider the position of liquidators and points they should be aware of in this regard.
Thu, 24 Oct 2019 - 06min - 11 - ITA guidance to BVI industry participants
In the eleventh instalment of Harneys’ Substance on Substance series, Philip Graham and Josh Mangeot summarise the presentation which representatives from the BVI Government, BVI Finance and the International Tax Authority (ITA) delivered to BVI industry participants on 16 October 2019.
Sat, 19 Oct 2019 - 08min - 10 - The Rules
In the tenth instalment of Harneys’ Substance on Substance series, Philip Graham and Josh Mangeot discuss the release of the final version of the guidance formerly known as the “Code”, which was published by the ITA on 9 October 2019 as its newly-titled Rules and explanatory notes (the Rules).
Thu, 10 Oct 2019 - 06min - 9 - Intellectual Property Business
In the ninth instalment of Harneys’ Substance on Substance series, Philip Graham and Josh Mangeot discuss points to consider if your BVI entity may hold intellectual property (IP).
Thu, 26 Sep 2019 - 06min - 8 - Substance Solutions in the BVI
In the eighth instalment of the Harneys Substance on Substance series, Philip Graham and Ross Munro discuss Substance Solutions in the BVI.
Thu, 19 Sep 2019 - 07min - 7 - Holding Business
In the seventh instalment of Harneys’ Substance on Substance series, Philip Graham and Joshua Mangeot give an update on timing of the ITA Code and consider some FAQs around the “holding business” and “finance and leasing business” definitions.
Wed, 11 Sep 2019 - 08min - 6 - What should directors be doing now?
In the sixth episode of Harneys’ Substance on Substance series, Philip Graham and Joshua Mangeot examine good governance principles for BVI entities in the context of the classification process and what entities should be doing now in light of their statutory obligations.
Thu, 29 Aug 2019 - 06min - 5 - Common misunderstandings regarding the ES timetable
In the fifth episode of Harneys’ Substance on Substance series, Philip Graham and Joshua Mangeot confirm that the first economic substance (ES) compliance “financial period” has commenced for all BVI companies and other relevant legal entities and also address some common misunderstandings regarding the ES timetable.
Thu, 22 Aug 2019 - 04min - 4 - Re-domiciliation
In the fourth episode of Harneys’ Substance on Substance series, Philip Graham and Josh Mangeot discuss the option of continuing a BVI entity out of the jurisdiction (sometimes called a “re-domiciliation” or “migration”) as a response to the economic substance legislation.
Wed, 14 Aug 2019 - 07min - 3 - Implications of The BOSS (Amendment) No 2 Act, 2019
In the third installment of Harneys’ SOS Series, Phil Graham and Josh Mangeot examine the implications of the first reading of the BOSS (Amendment) No 2 Act.
Tue, 30 Jul 2019 - 05min - 2 - Entity classification
In the second episode, Phil Graham and Josh Mangeot discuss the key aspects of an industry update provided by BVI Finance on 12 July 2019.
Tue, 23 Jul 2019 - 05min - 1 - Timing updates and classification requirements
Harneys launches its S.O.S. series, delivering hot takes on critical topics around the Economic Substance legislation.
Mon, 15 Jul 2019 - 08min
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