The Bermuda Registrar of Companies (the “Registrar”) issued an industry notice on 17 August 2022 confirming that changes required to address certain system errors within the Registrar’s Online Register Portal (the “Portal”) have now been completed. Entities in scope of the Economic Substance Act 2018 (the “ES Act”) which earned no gross revenue from a “relevant activity” during the relevant financial period ending 31 December 2021 are now able to submit the requisite “nil” Economic Substance Declaration Form (a “Declaration Form”) via the Portal. The filing deadline for Declaration Forms for such entities has been further extended from 31 August 2022 to 30 September 2022.
The Registrar has recently initiated desk-based reviews, requests for information and onsite inspections of entities to ensure compliance with the economic substance requirements.
Relevant Activities
The following are relevant activities, as defined by the ES Act:
Compliance Reviews
In an industry notice of 16 May 2022, the Registrar announced its intention to immediately increase the number of desk-based reviews and onsite inspections of entities regarding their compliance with the economic substance requirements. Such compliance reviews are a vital way for Bermuda to meet international regulatory standards. The Registrar has recently initiated this compliance review process, with entities receiving requests for information in connection with Declaration Forms filed in respect of previous years or notices of onsite inspection of the entity’s corporate and other records in respect of its economic substance obligations.
Planning for Your Future Compliance
Where an entity (i) is not a non-resident entity, (ii) has conducted a relevant activity and (iii) earned gross revenue in a relevant financial period in respect of such activity, its economic substance requirements will depend on the nature of the relevant activity and the particular circumstances of the entity.
Most entities are now several months into the relevant financial period that will be the subject of their 2023 Declaration Form filings. Compliance with the economic substance regime for in-scope entities can require careful planning.
Read our overview of economic substance requirements for Bermuda-based entities. We recommend seeking legal advice in Bermuda concerning the individual situation of any entity or proposed entity.
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