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Consultation on the introduction of substance requirements for Companies tax resident in Guernsey

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The Policy and Resources Committee ("PRC") is seeking feedback and comments on the outline proposals contained within this consultation.

The proposals relate to the introduction of legislation which will require companies tax resident in Guernsey, undertaking specific income generating activities, to demonstrate that they have sufficient substance in Guernsey.

Relevant activities include:

The substance requirements vary for each key activity to reflect the different needs of the companies involved. They are designed to be fair and proportionate while ensuring that there are sufficient activities undertaken in Guernsey to reflect the amount of profits accounted here.

The proposed new requirements follow the screening of a large number of non-EU jurisdictions undertaken by the European Commission Code of Conduct Group in 2017 to assess standards of tax transparency, fair taxation and compliance with measures to prevent base erosion and profit shifting. Guernsey and the other Crown Dependencies were re-affirmed as co-operative jurisdictions in December 2017, but the European Commission highlighted concerns about the ability of the Crown Dependencies to demonstrate that the companies tax resident in their jurisdictions operated with sufficient substance to justify access to the Islands' corporate tax regimes.

Guernsey and the other Crown Dependencies made a commitment to the European Commission to address these concerns in November 2017. The three jurisdictions have worked closely together to develop proposals which will enable them to meet this commitment by 31 December 2018. These proposals will require companies that are tax resident in Guernsey and engaged in key activities identified by the EU to demonstrate that they meet minimum substance requirements as part of their annual tax return.

This consultation sought to get feedback on the outline proposals to inform drafting of the relevant laws and allow government to ensure a smooth transition for companies carrying on relevant activities.

This consultation closed on Friday 31st August 2018, the results can be seen below. If you would like any further information please contact us on email: or phone: 01481 717168.


  • Results

    • Engagement
    • States of Guernsey officials have been working closely with counterparts in the Isle of Man and Jersey to collectively develop proposals to address the concerns raised by the COCG. 
    • This work has included technical dialogue with the European Commission (Taxation and Customs Union - TAX UD) and the COCG, both in plenary sessions with other jurisdictions and bilateral meetings. This engagement led to the COCG publishing a Scoping Paper[1] endorsed by ECOFIN on 22 June 2018, as to the specific measures and conceptual definitions they are expecting Guernsey to meet.
    • Discussions have also taken place with individual EU Member States, with this work coordinated by the Channel Islands Brussels Office. This has ensured meaningful feedback on the proposals put forward to meet the commitment made, within an extremely tight and challenging timeframe.
    • An industry working group was set up with representatives from the main industry bodies, including Guernsey International Business Association, Guernsey Association of Trustees, STEP Guernsey (the professional association for practitioners who specialise in family inheritance and succession planning) and the Guernsey Society of Chartered and Certified Accountants, as it is necessary to ensure that the proposals meet both the needs of local industry and our commitment to the EU.
    • A number of specific industry sector meetings were also held in the lead up to the launch of the public consultation on 6th August regarding the proposals (which was aligned with the consultation in Jersey) to which there were over 200 responses with 15 industry/professional bodies providing responses.
    • The majority of respondents acknowledged the necessity of compliance with COCG requirements and following the global anti-BEPS agenda. They also generally viewed the burden of requirements as relatively low. There was a clear desire for comprehensive guidance and continuing engagement with business throughout the drafting processes
    • The feedback from that consultation has informed drafting of the proposals, relevant legislation and will allow government to ensure a smooth transition for companies carrying on relevant activities.
    • The draft legislation was provided to the COCG, in order for the content to be considered at its meeting on 21 September 2018.  The feedback received from that meeting has informed further development of the proposals.



Closed: Friday 31st August

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