Q&As

What are the implications of the coronavirus (COVID-19) pandemic on the economic substance regimes of the Crown Dependencies and Overseas Territories?

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Published on LexisPSL on 20/03/2020

The following Private Client Q&A provides comprehensive and up to date legal information covering:

  • What are the implications of the coronavirus (COVID-19) pandemic on the economic substance regimes of the Crown Dependencies and Overseas Territories?

What are the implications of the coronavirus (COVID-19) pandemic on the economic substance regimes of the Crown Dependencies and Overseas Territories?

The Crown Dependencies of Jersey, Guernsey and the Isle of Man, and the Overseas Territories of Bermuda, Cayman Islands and British Virgin Islands (collectively referred to as the CDOTs), have all introduced new legislative economic substance requirements for companies and other entities with a presence in their respective jurisdictions.

The legislation has been designed to address concerns that companies could be used to artificially attract profits that are not commensurate with economic activities and substantial economic presence in the CDOTs. With this in mind, the legislation requires certain companies to demonstrate they have substance in relevant jurisdiction by:

  1. being directed and managed in the jurisdiction

  2. conducting core income generating activities in the jurisdiction, and

  3. having adequate people, premises and expenditure in the jurisdiction

For detailed information, see Practice Note: Economic substance legislation in the Crown Dependencies and Overseas Territories—summary.

Jersey

Jersey has issued the following guidance on the impact of the coronavirus (COVID-19) pandemic on the economic substance regime in Jersey:

‘Where companies operating practices have to be adjusted to compensate for the coronavirus outbreak, the Comptroller will not determine under Article 6, Taxation (Companies—Economic Substance) (Jersey) Law 2019, that a company has failed the economic substance test.

Where a company incorporated in another jurisdiction has been tax resident on the

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