The Crown Dependencies, including Jersey, have all committed to bringing in legislation regarding economic substance in 2019. This commitment was given in December 2017 to meet EU standards in respect of tax transparency, fair taxation and compliance with wider international tax initiatives.
While the legislation is yet to be passed, one of the key aspects is ensuring that mind and management are in the relevant jurisdiction, for example in Jersey. Whereas, ensuring management and control is in the relevant jurisdiction from a tax perspective has been a long-standing practice. Mind and management will enshrine in law how relevant companies need to ensure for example that Board meetings physically take place in the jurisdiction, that books and records are kept in Jersey and that the majority of the Board of Directors are physically present at meetings.
Relevant companies impacted by this new legislation, are determined by the nature of the activity undertaken and where the core income generating activities take place.
The activities are:
There will be other tests as well, and once the legislation is passed the Government of Jersey will be issuing formal guidance as to ensuring how economic substance criteria is maintained.
As a provider of trust and company services for 25 years, Fiduchi has a long history of having worked with its clients to ensure that principles of management and control or mind and management are maintained. Bound by a robust anti-money laundering legislation and regulatory environment, we have always sought to ensure that the fundamental rationale question of “why Jersey?” can be answered. The new legislation is expected to reinforce amongst other things the importance of good governance and ensuring that the rationale question continues to be answered positively.
For entrepreneurs of the 60’s & 70’s, it's time to stop and think about how they wish their legacy business to continue in the future in terms of continuation, capabilities and desire of the next generation to take over the family business.
We are already working with our existing clients in preparation of the new legislation coming into effect. However, if you would like to speak to us on how we could help you with your Jersey structure, we would be pleased to assist you. Our director led teams will assess your needs to ensure we take into consideration all your requirements and provide the bespoke service you require.