Substance

Our cross-service line teams advise on all aspects of compliance with substance legislation, including full structure reviews, ongoing compliance issues and implications for outsourcing arrangements.

International financial centers including BVI, Cayman, Guernsey and Jersey have passed new laws on economic substance, which have effect from 1 January 2019, to meet the requirements of the EU Code of Conduct Group. The OECD has launched consultation on similar principles and is expected to introduce its own substance requirements in due course.

The laws share the common objective of requiring certain entities to demonstrate economic substance in the jurisdictions in which they are tax resident, but jurisdictions have taken slightly differing approaches to the drafting of their respective laws.

Our team is able to advise clients in relation to their companies in each of our relevant jurisdictions and across service lines, as companies may carry out more than one relevant economic activity, offering expertise in relation to the implications for holding companies, investment funds and fund managers, banks, insurance businesses and companies carrying on financing and leasing business.

Services

We advise on:

  • Full structural reviews in the context of substance requirements.
  • Application of relevant substance legislation
  • Complying with substance legislation including:
    • Advising directors in relation to the direction and management test
    • Core income generating activities
    • Outsourcing
    • Adequate record-keeping
    • Directors' obligations
    • End of year filing requirements and certifications
    • Premises and persons requirements
    • Transaction monitoring and reporting requirements
  • Application of Guidance Notes
  • Analysis of existing business models for compliance with substance legislation
  • Ongoing compliance requirements