The Substance Laws took effect in each of BVI, Cayman Islands, Jersey and Guernsey from 1 January 2019.
There are a number of actions which relevant entities must be undertaking to ensure compliance – from clarifying tax residence and entity classification (i.e. whether the entity is conducting a 'relevant activity' for the purpose of the Substance Laws), to the structuring of contractual and outsourcing arrangements, the organisation of corporate governance, employment and premises arrangements, and the capturing of relevant business information required in due course for the preparation and filing of reporting information to the relevant tax office.
The penalties for non-compliance with the Substance Laws include financial penalties, spontaneous exchange of relevant information with relevant EU Member States and (eventually) striking off the relevant company registers and, in some jurisdictions, imprisonment.
We have experience of working closely with boards, shareholders, family offices and administrators of companies which are in scope of the Substance Laws and can assist in navigating these issues.
To facilitate compliance with the Substance Laws, we can map, review and advise on existing structures, contracts and governance agreements, and provide template board papers and resolutions, filings, contract updates and other documentation, to support economic substance compliance.
If you would like any more information or assistance with the impact of the Substance Laws on your business, your usual Mourant contact will be happy to discuss.