Many high-net-worth South Africans with offshore assets make use of offshore companies, trusts or other entities to house their assets.
They are likely now to be forced to review their offshore structures, including even the most standard ones, in light of a new rising tide in the form of the so-called EU Economic Substance Requirements, which have been translated into legislation with effect from 1 January 2019.
The Isle of Man, traditionally a popular offshore jurisdiction for South Africans, is one of the countries that has adopted new legislation, and consequently South Africans with businesses or structures there may need literally to “put people on the ground” to meet the substance requirements.
Speaking at an Isle of Man roadshow in South Africa, Basil Bielich, a partner with Peregrine Corporate Services in the Isle of Man, defined substance as the need for “an entity that attracts profits to be directed and managed in the jurisdiction, with adequate staff, premises and activities in the jurisdiction commensurate with its activities.”
Colin Bird, a partner with Maitland in the Isle of Man, said that there is likely to be an uptick in activity relating to the Isle of Man in the wake of the revised substance rules. “Entrepreneurs and families will need to consult with service providers as to substance requirements, the relevance of structures, and in some cases this may even lead to increased emigration to the Isle of Man.”
Mr Bird said that Maitland was seeing an increased level of interest in the migration of entities to the Isle of Man as a jurisdiction offering the skills and well regulated environment to meet the new substance requirements.
Nick Preskey of the Isle of Man government’s Department for Enterprise said: “The strong relationship between South Africa and the Isle of Man started in the late 1800s with many Manx miners being drawn to South Africa. These pioneers made a contribution to the growth of South Africa and in turn nowadays many South Africans contribute to the growth of the Isle of Man.
“There is a thriving South African community which makes up approximately seven per cent of the Island’s population, with strong business connections. There is a stable and safe environment in which entrepreneurs, families and businesses can find a home from home,” he said.
In addition to Maitland and Peregrine Corporate Services, other companies taking part in the Isle of Man roadshow are, The Optimus Group and Capital International Group.