Greek (Greece)

The Economic Substance (Companies and Limited Partnership) Act, 2018 ( “ESA Act”) was enacted in the British Virgin Islands (“BVI”) on December 28th, 2018 to come into force on January 1, 2019.


This legislation was introduced to address the concerns expressed by the Council of the European Union (EU) with respect to the absence of economic substance requirements for companies doing business in and through the BVI.  The enactment of this legislation reinforces BVI’s commitment to meet the international requirements on tax transparency.


The ESA Act provides that a legal entity, is subject to economic substance requirements if it conducts any of the following “relevant activities”:

  • Banking business
  • Insurance business
  • Fund management business
  • Finance and leasing business
  • Headquarters business
  • Shipping business
  • Holding business
  • Intellectual property business
  • Distribution and service centre business


The ESA Act provisions apply to BVI Business Companies and  Limited Partnerships with legal personality, as well as foreign Companies and Limited Partnerships with legal personality, that are registered in the BVI (hereinafter “Legal Entities”), which are conducting “relevant activities”, unless they can properly validate to be tax resident in a jurisdiction outside the BVI.  Limited Partnerships which have not elected to have legal personality, either local or foreign, are not subject to comply with the ESA Act. A legal entity which does not carry on any relevant activity is not subject to comply with the economic substance requirements.

Reporting Requirements:

All legal entities are required to provide their registered agent with sufficient information to enable the BVI International Tax Authority (“ITA”) to determine whether the entity is carrying on any relevant activity, and, if so, if the legal entity is complying with the legislation requirements.  

Legal entities which are not tax resident in the BVI will have to provide evidence from the tax authorities in the jurisdiction where they are tax resident.  Evidence of registration and tax payment is required on an annual basis.

Legal entities that are tax resident in a jurisdiction included on the EU list of non-corporative jurisdictions will not be allowed to claim to be tax resident outside of BVI.


The ESA Act outlines the range of penalties to be imposed for failure to provide the required information or for operating in breach of the economic substance requirements.  Penalties may include fines, imprisonment and/or entity to be struck off the Registry.

Economic Substance Code (Code):

On 23 April 2019, the ITA published a draft Code, which is supplementary to the Economic Substance Act and provides the guidance and rules regarding the implementation of the new economic substance requirements in the BVI, including additional guidance on the requirements for non-resident entities, the relevant activity definitions, considerations for applying the substance requirements and timelines.

The Act introduced obligations on entities to collect and submit information to enable the ITA to monitor economic substance requirements. This information needs to be submitted on an annual basis.


The Code states that entities must be in a position to comply with the requirements from the commencement of their first “financial period”.  The financial period for the purposes of the ESA Act will not necessarily be tied to the entity’s accounting period or fiscal year, and will be determined as follows:

  • The first financial period of a legal entity incorporated or formed on or after1 January 2019 will commence on the date of incorporation or formation and generally will be one year from that date.
  • The first financial period of a legal entity incorporated or formed before 1 January 2019 will begin on 30 June 2019and generally will be 12 months. 

The final Code is expected to be published by the end of May 2019, following an educational campaign and may probably include additional amendments deemed necessary by the BVI Government.

Globalserve can advice and assist you on the above, you can contact us at Αυτή η διεύθυνση ηλεκτρονικού ταχυδρομείου προστατεύεται από τους αυτοματισμούς αποστολέων ανεπιθύμητων μηνυμάτων. Χρειάζεται να ενεργοποιήσετε τη JavaScript για να μπορέσετε να τη δείτε. or call us at 00357 25 817181 


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