Economic Substance Requirements in Seychelles for Offshore IBC Companies

[we recommend you to read our article on Seychelles Offshore Companies Taxation before reading this Economic Substance Requirement, for logical order purposes only]

Only Seychelles companies part of a Multinational Group receiving passive income that meet the following conditions will be subject to economic substance requirements, provided they meet two of the following:11

• balance sheet total in excess of €20 million;

• net turnover of in excess of €40 million; or

• an average number of employees in excess of 250 during the financial year.

A company shall be regarded as having adequate economic substance if —

1. it has complied with filing requirements applicable to it under the Companies Act, 1972 (Cap. 40) or the International Business Companies Act, 2016 (Act 15 of 2016);

2. it has adequate human resources and premises in Seychelles for holding and managing the investment assets; and

3. (c)i in the case of a company other than a pure equity holding company or a real estate holding company it, in respect of any assets it acquires, holds, or disposes of —

   1. takes necessary strategic decisions; and

   2. manages and bears principal risks in Seychelles; and

   3. incurs adequate expenditure relating to the acquisition, holding or disposal, as the case may be.

That means that Pure Equity Holding companies and Real Estate Holding companies have a lighter economic substance requirement. 

A “pure equity holding company” means a company that, as its primary function, acquires and holds shares or equitable interests in companies and performs no substantial commercial or investment activity.

A “real estate holding company” means a company that, as its primary function, acquires and holds interests in immovable property.