Economic Substance

The hot topic was the new economic substance requirements which are slated to come into force in Jersey and Guernsey from 1 January 2019. These follow a review by the EU Code of Conduct Group on Business Taxation, and will set out minimum legal substance requirements for doing business in and through each jurisdiction. The Crown Dependencies have worked together to outline proposals which focus on companies carrying on certain “relevant activities”, of which the most relevant are fund management, finance and holding company activities. Under the current proposals, a company will need to be able to demonstrate that it is “directed and managed” in Jersey or Guernsey (as the case may be). The company’s “core income generating activities” will also need to be undertaken in the relevant jurisdiction. These requirements are not yet in final form so it is very much a watching brief over the next couple of months.

The Channel Islands Proposition

The keynote was delivered by Bridget Barker, and explored the proposition for Channel Islands funds post-Brexit. This theme led into a wider panel discussion on the advantages held by Jersey and Guernsey over other competitor jurisdictions. It was recognised that the administration offering was particularly strong, and the consensus was that although Jersey/Guernsey administrators were not necessarily the cheapest they did compare favourably to other close competitors in the private equity space. The panel felt that the product line was fairly strong, with the Jersey Private Fund and Guernsey Private Investment Fund both proving popular.

Expanding the Channel Islands Funds Sector

The closing panel focussed on ways to further internationalise the funds sector. This was a very positive finish to the day and picked up on a number of potential opportunities which had been highlighted throughout the previous sessions. Expertise in fund administration and robust anti-money laundering and countering the financing of terrorism (AML/CFT) legislation was highlighted as a strength. It was noted that promotion in the EU via the National Private Placement Regime (NPPR) in key EU jurisdictions will continue to be a tried and trusted route to market. There was also some speculation that the implementation of economic substance requirements in competitor jurisdictions could lead to opportunities for Jersey and Guernsey, who need to try and work together when promoting the Channel Islands brand to a global audience.

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