Guernsey To Update Economic Substance Legislation

The Guernsey Revenue Service announced yesterday further amendments to Guernsey's economic substance legislation to bring "self-managed" funds in scope of economic substance requirements.

Under these new amendments, a company that is a fund will be treated as a self-managed fund if it does not have an external fund manager. Where a company that is a self-managed fund either is tax resident in Guernsey or has exempt status, it will become subject to economic substance requirements in Guernsey as if it was carrying on the relevant activity of "fund management", even though it will not be receiving any management fees.

This extension of substance requirements to self-managed funds was originally announced in the updated guidance on economic substance requirements that was published on 22 November 2019 (for further details on this guidance see our briefing here), although the amendments will take effect from 1 October 2020 and so will not be retroactive.