The additional detail published on how these rules work in practice builds on the guidance issued when the legislation was made. The guidance is the product of extensive joint working between the governments of Guernsey, Jersey and the Isle of Man. This will ensure that the approach taken on the application of economic substance rules between the islands will be consistent with each other. The islands have also been working closely with the European Commission to ensure that this approach remains consistent with the principle set down the EU’s Code of Conduct on Business Taxation.

Deputy Gavin St Pier, President of the Policy & Resources Committee said: “The economic substance rules addressed concerns raised by the EU in 2017 and were implemented in 2018. The Policy & Resources Committee are pleased to be able to offer greater clarity to the financial services sector and their clients on how the substance rules will work in practice. These economic substance rules are innovative and have ensured that we received positive reviews of this regime against EU and OECD standards in March and July of this year, respectively. We will continue to work to maintain our leadership role as a cooperative jurisdiction, in terms of tax transparency as well as against standards of fairtaxation.”

For information, including a copy of the guidance is available here.