New proposed requirements for an economic substance test for
Jersey tax-resident entities have been published to meet the
requirements of the EU Code of Conduct Group.
The reforms published today – and set to come into force
on 1 January, subject to States approval – establish new
tests for tax resident entities carrying on "relevant
activities", including fund management. The tests require
those entities to demonstrate that they meet the economic substance
tests, including that they are "directed and managed" in
Jersey, and that certain of their "core income generating
activities" are undertaken here.
Fund vehicles themselves are out of scope, but we expect the
majority of our fund manager clients to be in scope (as they will
have gross income in relation to their fund management activities)
and so consideration will need to be given to the level of activity
carried out in Jersey, with specific consideration being given to
outsourcing arrangements.
