What to Know About the British Virgin Island Economic Substance Act

In late 2018, the British Virgin Islands (“BVI”) passed the Economic Substance (Companies and Limited Partnerships) Act (“Act”), which imposes substantive requirements for certain BVI legal entities conducting relevant activities. The Act came into effect on January 1, 2019 and was amended on January 30, 2019.  The Act was established based on concerns rising from the EU (European Union) Code of Conduct Group for Business Taxation and OECD (Organization for Economic Co-operation and Development) guidance around the economic substance of entities in jurisdictions a very low to zero percent corporate tax.

What is a Legal Entity?

Legal entities, for this purpose, is any company or partnership (as defined by the Act) that is considered BVI tax resident and is conducting a “relevant activity” during a financial period in which it receives income from that activity.  Certain circumstances where an entity concludes that they are not a BVI tax resident does not exclude that entity from reporting certain information.

What is Relevant Activity?

Relevant activity under the Act establish is described with reference to nine different types of categories (see below):

  1. Banking
  2. Distribution and service centers
  3. Fund management
  4. Finance and leasing business
  5. Headquarters business
  6. Holding business
  7. Insurance
  8. Intellectual property
  9. Shipping business

However, even if you believe an entity does not conduct a “relevant activity,” the entity may still have to report certain information to avoid any penalties or possible removal from the BVI company registrar.

EPGD Business Law is located in beautiful Coral Gables. Call us at (786) 837-6787, or contact us through the website to schedule a consultation.

*Disclaimer: this blog post is not intended to be legal advice. We highly recommend speaking to an attorney if you have any legal concerns. Contacting us through our website does not establish an attorney-client relationship.*

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Eric Gros-Dubois

Founding partner Eric Gros-Dubois established EPGD Business Law in 2013. With over a decade of experience expanding the firm and leading it to its current success, Eric now primarily manages the corporate division of EPGD. Given Eric’s educational background, holding both a JD and MBA, combined with his own unique experience of starting a business from scratch and growing it to a multi-million dollar firm, he brings a specialized and invaluable perspective to those seeking legal assistance for themselves and their businesses. Having now instilled his same values in our team of skilled corporate associates, Eric leads a firm that is always ready, willing, and equipped to handle any and every legal matter that a business owner may have.


*The following comments are not intended to be treated as legal advice. The answer to your question is limited to the basic facts presented. Additional details may heavily alter our assessment and change the answer provided. For a more thorough review of your question please contact our office for a consultation.



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