Economic Substance Advisory refers to services provided by professionals or consulting firms to assist businesses in understanding, implementing, and maintaining compliance with economic substance regulations. Economic substance regulations are often enacted by countries or jurisdictions to ensure that entities conducting certain types of activities within their borders have a substantial presence and economic impact.

Key elements of Economic Substance Advisory services may include:

1. Regulatory Compliance:

   • Helping businesses understand the specific economic substance requirements imposed by the relevant jurisdiction. This involves providing guidance on legislation, regulations, and compliance obligations.

2. Assessment and Analysis:

   • Conducting an assessment of the client’s business activities to determine whether they fall within the scope of economic substance regulations. This involves analyzing the nature and scale of the activities conducted in the jurisdiction.

3. Implementation Planning:

   • Assisting businesses in developing and implementing strategies to meet the economic substance requirements. This may involve adjustments to the company’s operating model, organizational structure, and business practices.

4. Documentation and Reporting:

   • Advising on the preparation of necessary documentation to demonstrate compliance with economic substance requirements. This includes maintaining records, preparing reports, and fulfilling reporting obligations to the relevant authorities.

5. Risk Management:

   • Identifying potential risks and challenges related to economic substance compliance and providing strategies to mitigate these risks.

6. Audit Support:

   • Assisting with the preparation for and response to any audits or reviews conducted by regulatory authorities to assess economic substance compliance.

7. Continuous Monitoring and Updates:

   • Providing ongoing support to ensure that businesses remain in compliance with any changes in economic substance regulations. This includes staying informed about legislative updates and advising on necessary adjustments.

Economic substance regulations are often implemented in response to international initiatives aimed at preventing harmful tax practices and ensuring that businesses have real economic activities in the jurisdictions where they operate. These regulations are particularly relevant in the context of tax havens and jurisdictions that attract multinational enterprises.

It’s important to note that the specifics of economic substance regulations can vary by jurisdiction, and businesses operating in multiple jurisdictions may need tailored advisory services to navigate the complexities of different regulatory frameworks. Therefore, businesses seeking economic substance advisory services should work with professionals who have expertise in the relevant jurisdiction’s regulations and compliance requirements.