According to a government announcement on 23 October 2018, Minister for External Relations Ian Gorst lodged a draft economic substance law for debate by Jersey’s States Assembly. The Law has been designed to address concerns of the EU Code of Conduct Group on Business Taxation about the need for relevant businesses to demonstrate adequate economic substance in the Island.
The government decided to impose substance requirements on companies undertaking relevant activities including banking business, insurance business, fund management business, finance and leasing business, headquarters business, shipping business, holding company business, intellectual property holding business; distribution and service center business.
The relevant activities mentioned previously, need to demonstrate that the core income generation activities associated are undertaken in Jersey (either by the company or a third party).
A resident company will satisfy the economic substance test if
The Comptroller may issue guidance on how the economic substance test may be met, including without prejudice to the generality of the foregoing, any expression used in this Article for the purpose of that test, including the meaning of “adequate”.
In order to demonstrate meaningful enforcement of any proposed substance requirements, the draft law regulates a formal hierarchy of sanctions for non-compliant companies that fail to meet the substance test and to provide accurate information.
One of TPA’s technology partners Cygnet Infotech has developed a comprehensive VAT solution named R7VAT MTD, which is amongst others recently approved by HMRC for use by companies in the UK to automate and manage their VAT returns filing process but can also be used broadly within the EU.
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