Guernsey has satisfied the EU Council’s Code of Conduct Group and the European Council of Finance Ministers (ECOFIN)’s legal substance requirements for entities operating in or through the jurisdiction.
The Code Group’s findings, that Guernsey’s approach is proportionate and requires that companies that are tax resident in Guernsey and undertaking specific activities to demonstrate that they have sufficient substance in the island, was formally approved at the ECOFIN meeting in Brussels on 12 March.
According to Guernsey Finance, the island’s government consulted with the industry to clarify the legislative and reporting requirements to meet the Code Group’s standards and also worked closely with Jersey, the Isle of Man and the EU Commission.
In 2017, Guernsey committed to address a number of issues raised by the Code Group on business taxation. Then, the island formally committed to maintaining economic substance.
In the same year, its government committed to the Organisation for Economic Cooperation and Development’s anti-base erosion and profit shifting (BEPS) action plan and became a member of the BEPS Inclusion Framework.
The issue of the Code Group’s legal substance requirements were a subject of discussion at 2018’s Guernsey Insurance Forum.
Guernsey Finance chief executive, Dominic Wheatley, commented: “Guernsey has a history of more than 50 years as a specialist global finance centre and we were confident that we would be seen to be a jurisdiction of true substance.”
“Our diversity, breadth and depth of expertise naturally creates a competitive global finance centre, based on the substance of the advice and services we deliver,” he said.
“This is a real endorsement of Guernsey as a co-operative jurisdiction and further indication of our ongoing commitment to meeting international standards.”
He explained: “In meeting those standards we are able to provide the certainty, stability and competitiveness that our clients demand.”
“The commitment to being a mainstream competitive jurisdiction is at the heart of our offer.”
“Our government has engaged actively on this issue in a short time frame, and industry has recognised the importance of this issue and engaged accordingly.”