Does an entity carry out finance and leasing business?



Does an entity carry out finance and leasing business?

Therefore, unless an entity has been providing loan financing to subsidiaries or third-parties frequently or as its main business, it is possible to argue that the entity does not carry out finance and leasing business in all cases, but this is very dependent on the nature and relative size and objective of the financing*.

What are the full economic substance requirements for financing and leasing?

If the company is performing the activity of “financing and leasing”, the “full” economic substance requirements must be fulfilled (as set out above). If the loans are not for consideration (for example, they are interest free) the company would not be classed as a “finance and leasing” company.

What is a finance and leasing business?

BVI and Cayman Islands – “Financing and leasing business” means the business of providing credit facilities for any kind of consideration (including interest) to another person. However, an entity that provides credit as an incidental part of a different sort of business will not be treated as carrying on a finance and leasing business.

Is the provision of credit a finance and leasing business?

However, an entity that provides credit as an incidental part of a different sort of business will not be treated as carrying on a finance and leasing business. It is only when the provision of credit can be seen to be a business activity in its own right that the entity will be treated as a finance and leasing business.