ECOFIN decision welcomed

Wednesday 13 March 2019

The States and finance industry bodies have welcomed the news that Guernsey has been recognised as a 'cooperative jurisdiction' meaning it won't be added to any EU tax blacklists.

The news was announced yesterday with the Economic and Financial Affairs Council of the European Union (ECOFIN) confirming it had "reaffirmed its previous decision" and it hasn't put Guernsey on the latest 'blacklist'.

It means Guernsey’s global reputation as an EU approved competitive finance sector has been further enhanced. The decision followed confirmation from the EU Council’s Code of Conduct Group and the European Council of Finance Ministers (ECOFIN) that the island has satisfied its legal substance requirements for entities operating in or through the jurisdiction.

Guernsey Finance's Chief Executive Dominic Wheatley was among the first to say, the positive confirmation was to be expected.

Pictured: Dominic Wheatley. 

“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.

“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.”

The EU tax havens list is a true ???????? success. It has had a resounding effect on tax fairness worldwide. Thanks to the listing process, dozens of countries have abolished harmful tax regimes and come into line with international standards on #transparency and #FairTaxation #EUlist

— Pierre Moscovici (@pierremoscovici) March 12, 2019

The latest 'tax havens list' was released by Pierre Moscovici, the European Commissioner for Financial Affairs.

Politically the decision to 'whitelist' Guernsey and to recognise the island's high standards and transparency was welcomed by senior deputies, with Chief Minister Gavin St Pier replying to Mr Moscovici saying; "Guernsey thanks your cabinet, Commission Services and the Code Group for ensuring an objective process, enabling ECOFIN to make an informed and evidenced decision, proving the process works. We look forward to ongoing dialogue as a cooperative jurisdiction and good neighbour."

Good to see that the EU has confirmed that Guernsey continues to be a cooperative jurisdiction in this review | Taxation: Council revises its EU list of non-cooperative jurisdictions https://t.co/uI17LCcDXz

— Jonathan Le Tocq ???????? (@letocq) March 12, 2019

Deloitte Partner Jo Huxtable thinks it will be good news in a practical sense for businesses in the Crown Dependencies, as they can now start their review of the new substance requirements which were introduced in Guernsey, Jersey and the Isle of Man for accounting periods starting on or after 1st January 2019.  

“The published guidance that currently exists covering key aspects of the new substance legislation is likely to be expanded and supplemented with specific industry guidance in due course.  

“Companies, tax resident in Jersey, Guernsey, or the Isle of Man with activities in one of the relevant categories (banking, insurance, fund management, finance and leasing, holding company, income from intellectual property, distribution and service centres, shipping, and headquarters) should review operations to ensure their substance is adequate and that compliance with the specific tests can be evidenced.  

“Service providers may wish to conduct this analysis for their own companies resident in Jersey, Guernsey, and the Isle of Man as well as those across their client base.”

Pictured: Jo Huxtable. 

In practical terms, the whitelisting should mean other jurisdictions recognise Guernsey as a transparent jurisdiction.

Lawyer, Gavin Farrell, said that should also mean an end to unfounded criticism of the island's financial services and affairs. 

Pictured: Gavin Farrell.

"It is very pleasing to see that one of the highest institutions in Europe, the Council of Finance Ministers of the EU, has today fully endorsed Guernsey’s corporate and governance structure and completely removed us from the so-called grey list of tax havens as published by the European Commission," he said.

"In practical terms, that means that there is a higher international recognition that the services and support we in Guernsey provide to our client companies are not seen as enabling empty shelf companies or tax leakages. Indeed, with our longstanding practices, and the new legal and tax requirements supporting such practices, and our commitment to tax transparency, our companies have sufficient substance requirements that support economic activity in Guernsey and avoids criticism of being harmful tax practices. This recognition has been achieved through the unified approach between our government and industry in addressing unfounded criticisms and comments led by principally our detractors or competitors."