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The B.V.I., Cayman Islands, and Bermuda – Current Practice, Enforcement, and Emerging Trends

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The B.V.I., Cayman Islands, and Bermuda – Current Practice, Enforcement, and Emerging Trends

These three leading Caribbean international financial centers are members of the Caribbean Financial Action Task Force and have consistently implemented O.E.C.D. initiatives and E.U. requirements. They pride themselves in following international best practices. None of the regimes discussed below is a taxing regime. Consequently, their compliance focus is on information exchange, increased transparency and economic substance. Joshua Mangeot, a partner of the B.V.I. office of Harneys Celeste Aubee, an associate in the B.V.I. office of Harneys, explain the hurdles that have been overcome to remain in good standing with Europe and the U.S.

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British Virgin Islands Economic Substance Requirements

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British Virgin Islands Economic Substance Requirements

Just as water flows downhill, action to prevent aggressive tax planning flows from (i) the O.E.C.D. in its B.E.P.S. Action Plan, especially Action 5 applicable to no or nominal tax jurisdictions (“N.T.J.’s”) to (ii) the E.U. Code of Conduct Group (“C.O.C.G.”), in its scoping paper identifying nine relevant activities and economic substance criteria for N.T.J.’s to avoid the E.U. blacklist, to (iii) the N.T.J.’s, themselves, in steps taken to police economic substance requirements of local law. The B.V.I. heard the message and has implemented a robust information reporting system for relevant entities. In their article, Joshua Mangeot, a partner in the B.V.I. office of Harneys and Kiril Pehlivanov, a member of the investment funds and regulatory team in the B.V.I office of Harneys, explain the effect of the B.V.I. economic substance regime on companies and limited partnerships registered in the B.V.I. and provide practical guidance for compliance and reporting.

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Economic Substance: Views From the U.S., Europe, and the B.V.I., Cayman, and Nevis

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Economic Substance: Views From the U.S., Europe, and the B.V.I., Cayman, and Nevis

Like concepts of beauty, the presence or absence of economic substance in the tax context often is in the eye of the beholder. More importantly, economic substance means different things to tax authorities in different jurisdictions and the approaches in taxpayer obligations varies widely. This article looks at the concept of economic substance in three separate localities. Stanley C. Ruchelman and Wooyoung Lee look at the U.S., addressing case law establishing the requirement and the 2010 codification of the concept into the tax code. Werner Heyvaert, a partner in the Brussels Office of AKD Benelux Lawyers, and Vicky Sheik Mohammad, an associate in the Brussels Office of AKD Benelux Lawyers, look at the Danish Cases that establish an abuse of rights view for aggressive tax planning – the taxpayer abused rights granted to it by E.U. law – and the Unshell Directive designed to remove certain tax benefits from shell companies. David Payne, Global Head of Governance for Bolder Group, looks at the self-certification rules that have been adopted in the B.V.I., Cayman, and Nevis.

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Insights Vol. 2 No. 5: F.A.T.C.A. 24/7

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I.R.S. OFFERS GUIDANCE TO TAXPAYERS SEEKING ELECTRONIC NOTIFICATION ON F.A.T.C.A. REPORTS

The Internal Revenue Service (“I.R.S.”) provided guidance to taxpayers who do not receive notification of the status of their reports once they have uploaded the data into the electronic system used to transmit information regarding overseas bank accounts to the I.R.S. under the Foreign Account Tax Compliance Act (“F.A.T.C.A.”). There has been growing concern among taxpayers as to what to do if they successfully upload a F.A.T.C.A. report into the International Data Exchange Service (“I.D.E.S.”) but do not get an International Compliance Management Model (“I.C.M.M.”) notification letting them know the status of the report.

The I.R.S. added a new Item D9 to its F.A.T.C.A. I.D.E.S. Frequently Asked Questions and Answers relating to data transmission. The I.R.S. has also stated that a similar question and answer was added to the F.A.Q.’s on the I.C.M.M., the I.R.S. system that ingests, validates, stores, and manages F.A.T.C.A. information once it is received.