BVI - "Pure Equity Holding Entity" Type

[inector]

Saw this "pure equity holding entity" mentioned in another thread.

Upon reading, it's a BVI company that would be subject to much less economic substance requirements. More from Harneys and Mourant reports:

...“pure equity holding entity”, meaning a legal entity that only holds equity
participations in other entities and only earns dividends and capital gains.

Then:

Pure equity holding entities are subject to a reduced economic substance test under the Act. As such, a pure
equity holding entity, which carries on no relevant activity other than holding equity participations and earning
dividends and capital gains, will have adequate substance if it:
• complies with its statutory obligations under the BVI Business Companies Act, 2004 or the Limited
Partnership Act, 2017 (as applicable); and
• had adequate employees and premises for holding and/or managing equitable interests or shares

It looks like a registered agent + maybe part-time accountant (just to send dividends to you when needed) can qualify for substance requirements.

Does it mean you can have substance + asset protection for just around 5-7K in BVI? How would Europe view this setup?

 

[whatspat]

Edit: sorry, I was thinking only about taxation with my answer below, this has no impact on your actual question about asset protection; sorry I can't comment on that part.

You have to evaluate the CFC/PE rules in the other jurisdiction to figure it out, and it might not be very black and white. Also, for what it's worth, the economic substance rules only apply to a relatively short list of company types, with "holding company" being one of them, and this additional exclusion giving you a way around it. In other words, if your business is of a type which isn't on the list to start with, the ES rules don't apply anyway, and you're back to CFC/PE rules in other jurisdictions to figure out taxation.

Further, note that most of the other offshore jurisdictions added similar exceptions or conditions to their ES rules. Somehow, passing the legislation was sufficient to get the OECD/EU off their back despite these obvious loopholes designed to let them continue business as usual.

 

[Martin Everson]

It looks like a registered agent + maybe part-time accountant (just to send dividends to you when needed) can qualify for substance requirements.

P.S I already talked about a company providing ES services in BVI to meet the requirements in below thread.

BVI Substance Services?

Does anyone have recommendations for a BVI substance service provider? The service should include a local BVI director, employee, address (office), etc.

www.offshorecorptalk.com