The Cayman Islands appeared on the EU’s list of jurisdictions committed to addressing concerns relating to economic substance.
In order to address concerns (and remain on the EU’s grey list), the Cayman Islands passed new Economic Substance legislation and regulations, which came into force on 1 January 2019.
Relevant Entities Must Satisfy Economic Substance Test
The new law indicates that a relevant entity that carries on a relevant activity is required to satisfy the economic substance test in relation to that relevant activity.
The date from which a relevant entity shall satisfy the economic substance test in relation to a relevant activity shall be:
**the date on which the relevant entity commences the relevant activity, in the case of a relevant entity that was not in existence prior to the commencement of the Economic Substance Law; or
** 1st July 2019, in the case of a relevant entity that was in existence prior to the date of commencement of the Economic Substance Law.
Are You Engaged In Relevant Activity?
Relevant activity does not include investment fund business but includes fund management business, distribution and service centre business, financing and leasing business, headquarters business, holding company business, insurance business, intellectual property business and shipping business.
For further guidance regarding your specific entity, please contact firstname.lastname@example.org
About the author
Alric Lindsay is a Cayman Islands corporate/funds lawyer and an independent fund director approved by the Cayman Islands Monetary Authority and licensed under The Directors’ Registration and Licensing Law. Alric also acts as voluntary liquidator to Cayman Islands entities. Alric can be contacted at email@example.com.