Seychelles: What Substantial Activity Means

To qualify for preferential tax treatment, Seychelles licensees (under the Securities Act or Mutual Fund and Hedge Fund Act) must meet substantial activity requirements.

Here’s what’s required:

1. Core Income Generating Activities must be performed in Seychelles

These activities must be carried out at the business premises or office of the licensee in Seychelles.
They cannot be outsourced outside of Seychelles (except for front-office activity in some cases).

2. Adequate full-time qualified employees

Licensees must employ, directly or indirectly, a reasonably adequate number of suitably qualified full-time Seychelles-resident employees.
“Qualified” means individuals must have relevant academic or professional experience.
The FSA assesses adequacy based on business volume and complexity.

3. Adequate operating expenditures in Seychelles

You must incur commensurate operational expenses locally—aligned with the size and complexity of your business.
Evidence is drawn from Quarterly Returns, Audited Financials, and Management Accounts.

4. Third-Party outsourcing: limited and controlled

Outsourcing of core activities is allowed within Seychelles, if you:
- Maintain adequate supervision
- Avoid double-counting employees across multiple licensees
Outsourcing outside Seychelles = requirements are not met.

5. Front-Office activities outside Seychelles (conditional exception)

These may be allowed if the middle-office and back-office activities are performed in Seychelles.
The FSA will assess the balance of operations on a case-by-case basis.

Claiming the preferential tax rate

To apply the preferential tax rate:

Request written confirmation from the FSA before submitting your Annual Tax Return
Submit by January 31st of the following year (tax year), with:
- A covering letter
- Self-declaration form
- Establishment list and organisational chart

The standard Seychelles business tax rate applies where the licensee fails to meet the requirements.

Need help aligning your Seychelles structure with substance rules?