Jersey today released a document providing further details on the operation of a draft law that will require companies located in Jersey, Guernsey, and Isle of Man to have greater economic activity before being considered registered there for tax purposes.
The development follows the EU Code of Conduct Group on Business Taxation decision last December place Jersey and the other crown dependencies on EU’s so-called “gray list” of non-cooperative tax jurisdictions. These countries pledged to improve their substance requirements for tax purposes by abolishing tax regimes that facilitate offshore structures which attract profits without real economic activity. If they do not carry through with that pledge, the crown dependencies will likely be moved on to the EU tax blacklist.
The new legislation and guidance requires companies to demonstrate substance by proving that they are directed and managed in Jersey, conduct core income-generating activities on the island, and have adequate people, premises and expenditure there.
The substance requirements apply to categories of geographically mobile finance and other service activities.
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