The Guernsey government has approved new regulations which
impose an economic substance test for Guernsey tax-resident
companies to meet the requirements of the EU Code of Conduct Group.
These regulations were approved by the EU's ECOFIN council on
12 March 2019 and as a result, Guernsey was re-affirmed as a
co-operative jurisdiction in terms of tax transparency and for
action 5 of BEPS.
The regulations came into force on 1 January, establishing tests
for tax resident companies carrying on "relevant
activities", including fund management. The tests require
companies that are in scope to demonstrate that they have economic
substance in Guernsey, including that they are "directed and
managed" in Guernsey, that certain of their "core income
generating activities" are undertaken here, and that the
companies have "adequate" premises, employees and
expenditure in Guernsey proportionate to the level of relevant
activity carried on in Guernsey.
