Guernsey satisfies EU economic substance requirements
Guernsey has satisfied the EU Code of Conduct Group and the European Council of Finance Ministers’ legal substance requirements for entities operating in or through the jurisdiction.
The screening of a large number of non-EU jurisdictions in 2017 to assess standards of tax transparency, fair taxation and compliance with measures to prevent base erosion and profit shifting re-affirmed Guernsey, Jersey and the Isle of Man as co-operative jurisdictions, but at that time the European Commission highlighted concerns about the ability of the Crown Dependencies to demonstrate that companies tax resident in their jurisdictions operated with sufficient substance to justify access to the islands’ corporate tax regimes.
In response, the governments of Guernsey, Jersey and the Isle of Man worked closely together to develop proposals to meet their commitments to the European Commission to address these concerns. The Code of Conduct Group’s findings, specifically that Guernsey’s approach is proportionate and requires that companies that are tax resident in Guernsey and undertaking specific activities demonstrate that they have sufficient substance in the island, were formally approved at the ECOFIN meeting in Brussels on 12 March 2019.
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