This Q&A sets out an overview of substance legislation
across our jurisdictions, with particular relevance to questions
about how the law came about, the scope of the law, the definitions
attached to the tests involved, and sanctions for
non-compliance.
Why are Jersey, Guernsey, BVI and Cayman (among others)
implementing these changes?
Following a review by the EU's Code of Conduct Group in 2017
to assess standards of tax transparency, fair tax and compliance
with measures to prevent base erosion and profit shifting (which is
the subject of the OECD's BEPS project), BVI, Cayman,
Guernsey and Jersey were re-affirmed as co-operative jurisdictions,
but the European Commission highlighted concerns about the ability
of the Crown Dependencies and British Overseas Territories (which
include the Cayman Islands and the British Virgin Islands) to
demonstrate that companies tax resident in their jurisdictions
operated with sufficient physical substance to justify
