May 5, 2020
The Registrar of Companies for Bermuda launched the new Economic Substance Declaration (ESD) Portal on 1 May 2020. The declaration form needed to comply with Bermuda’s economic substance rules can only be filed via the ESD Portal, which is available at www.registrarofcompanies.gov.bm.
The ESD is required under the Economic Substance Amendment Act 2019. The legislation requires a “relevant entity” conducting “relevant activity” to report and maintain economic substance.
Under the legislation non-resident entities carrying on a relevant activity will not be subject to Bermuda economic substance requirements. They are obliged, however, to provide to the Registrar of Companies for each relevant financial period the name of the jurisdiction in which it claims to be resident for tax purposes together with sufficient evidence to support that tax residence. This information is lodged on the Economic Substance portal.
Bermuda as a member of the OECD Inclusive Framework on Base Erosion and Profit Shifting (“BEPS”) enacted the Economic Substance Law in response to requirements for geographically mobile activities to have economic substance developed under BEPS Action 5. Similar legislation has been enacted in all OECD-compliant jurisdictions with no or nominal tax, including the British Virgin Islands, the Cayman Islands, Guernsey and Jersey.
The Registrar has also launched instructional videos, detailing how to set up a user and organisation account to submit a declaration form, and how to prepare a new declaration form
The Economic Substance Register uses Foster Moore’s Catalyst™ registry platform. The Bermuda Registrar of Companies Online Companies and Partnerships Register will be the next register deployed on the platform and will allow for registering and maintaining companies, LLCs and partnerships.
Foster Moore welcomes enquiries from jurisdictions who have similar Economic Substance laws.
Bermuda economic substance legislation
The Economic Substance Act came into effect in Bermuda on 1 January 2019 with a six-month transition period for entities in existence prior to 2019. Registered entities conducting one or more relevant activities (banking, insurance, intellectual property, distribution and service centres, shipping, leasing, financing, fund management, holding company, headquarters) are required to meet the domestic economic substance requirements—including the requirement that prescribed core income-generating activities be conducted in Bermuda.