British Virgin Islands

Saturday, Oct 31, 2020

Trust Companies Commence Economic Substance Compliance

Trust Companies Commence Economic Substance Compliance

The BVI financial services industry is in the process of preparing its clients to meet the economic substance criteria that was placed on the Territory last year.

The economic substance matter arose following a decision by the Council of the European Union (EU) to adopt a Code of Conduct for business taxation. It essentially calls for businesses to demonstrate some form of physical presence in the Territory. In response, the BVI complied by passing the Economic Substance (Companies and Limited Partnerships) Act, 2018.

Since the passage, the BVI financial services sector has taken a can-do attitude. This attitude is being especially demonstrated by the fact that various companies have created means to assist their clients.

For instance, companies such as Vistra, a locally based globally expanded company that offers services in the establishment of a broad range of BVI trust and corporate structures; and Harneys – one of the first trust service providers in the Territory have already commenced preparations. Both companies have commenced preparations by simplifying the requirements for their clients through the use of a questionnaire, among other things.

Vistra on July 17 officially launched its Economic Substance Services and Solutions. This initiative, the company explained, commences with their specially prepared British Virgin Islands Economic Substance Classification Questionnaire. This questionnaire, it was explained, is designed to help clients determine the classification of their BVI company as it applies to the substance legislation, and was developed by Vistra’s in-house legal team.

The company explained that the BVI Economic Substance Classification Questionnaire is an efficient and effective service for any BVI entity to gain clarity on their status. It was also noted that the questionnaire is supported by detailed analysis and tailored solutions.

Simon Filmer, Global Lead, Company Formation of Vistra commented, “It is now mandatory for all BVI entities to comply with substance requirements and demonstrate good corporate governance. The first step to achieving these goals is to determine if one's entity is in-scope or out of scope, and Vistra is ready to help make this classification process as simple, direct and effective as possible for our clients.”

This questionnaire, it was noted, is user-friendly, comprising a short list of questions for clients to fill in.

“Based on the questionnaire submitted, Vistra's subject matter experts will conduct a detailed analysis and produce a comprehensive report outlining reporting obligations and concrete suggestions on next steps to ensure substance compliance. The entire process is quick and streamlined, offering clients the peace of mind required to ensure business as usual,” the company further explained.

It was also noted that Vistra is providing a comprehensive range of substance services for BVI entities, including legal opinions, full portfolio review and advisory services, lodgement with regulators, and in-jurisdiction substance services, where required.

Meanwhile, Harneys announced that it also has prepared a classification questionnaire for its clients to assist them with their economic substance needs. As part of its offer, Harney says it is providing clients with a user friendly interactive and intuitive online questionnaire, with real time classification results.”

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