The Council of the European Union (Council) at its meeting on 5th December 2017 adopted its own conclusions on the EU list of non-cooperative jurisdictions for tax purposes. The list of those jurisdictions can be found in Annex I to the document entitled “Outcome of Proceedings” produced by the Council and its full version can be found here.
The Council has confirmed that the non-cooperative jurisdictions will remain on the list until they meet the criteria that include fulfilling the recommendations on the steps to take in order to be de-listed.
Annex II to the Outcome of Proceedings document contains the so called state of play of the cooperation with the EU with respect to commitments taken to implement tax good governance principles and records the commitments taken by the screened jurisdictions to address issues identified with respect to the criteria grouped under the following headings:
- fair taxation; and
- anti-BEPS measures
The sub-paragraph 2.2 of the heading “fair taxation” deals with the existence of tax regimes that facilitate offshore structures which attract profits without real economic activity. It then lists the following jurisdictions that are committed to addressing the concerns relating to economic substance by 2018:
Bermuda, Cayman Islands, Guernsey, Isle of Man, Jersey and Vanuatu.
What is expected from Jersey?
Although Jersey has been listed as co-operative jurisdiction, this is subject to the successful delivery of its commitments. The Code of Conduct Group will therefore monitor the timely implementation of these commitments and will continue the constructive dialogue with Jersey.
Annex VII to the Outcome of Proceedings document outlines the scope of the criteria on fair taxation and, inter alia, states that:
- in the context of criterion 2.2, the fact of absence of a corporate tax or applying a nominal corporate tax rate equal to zero or almost zero cannot alone be a reason for concluding that a jurisdiction does not meet the requirements of criterion 2.2; and
- a jurisdiction should be deemed as non-compliant with criterion 2.2 if it refuses to engage in a meaningful dialogue or does not provide the information or explanation that the Code of Conduct Group may reasonably require or otherwise does not cooperate with the Code of Conduct Group where it needs to ascertain compliance of that jurisdiction with criterion 2.2 in the conduct of the screening process.
To ensure that the process of relevant changes is completed by the end of 2018 the Government have already produced a comprehensive timetable that includes consultation with industry, publication of draft legislation and debate by the Assembly. According to the Chief Minister, the work required to implement the Jersey’s commitment may include changes to its regulatory and legal framework and additional accounting and reporting obligations.
Whilst there is certainly no doubt that Jersey is committed to working with the Code of Conduct Group in relation to the question of economic substance and has fully accepted that commitment to complete the process by the end of 2018 it would be interesting to see what changes will Jersey make to its legislative framework in relation to economic substance.
How can we help?
Our teams have experience in assisting businesses in relocating to and setting up presence in Jersey. Working closely with our clients and their advisors we assist with the key considerations when moving the business operations or headquarters to Jersey. We support our clients all the way from setting up of a suitable local legal entity and to providing full on-going corporate governance support.
We are able to either accommodate clients within our own office or source a separate managed office space based on different needs and requirements. In both cases we will provide full support in setting up IT infrastructure and provide a dedicated IT support on an ongoing basis.
We will assist with the recruitment of local staff or will second our staff to immediately support the local operations. We will also provide full HR assistance and payroll services to any local employees.
We can take care of any local accounting and bookkeeping requirements and will source further assistance and advice with respect to any local tax filing and other reporting obligations.
We are also happy to assist with application for a local business license to operate, occupy office space and employ non- locally qualified employees.
If you would like to discuss this article, please contact Mirek Gruna.
By Mirek Gruna, Managing Director.