Guernsey Update: New Plans for Bringing Partnerships in Scope of Economic Substance Rules

The States of Guernsey’s Revenue Service has issued further details of the proposals to bring partnerships into scope of economic substance requirements for accounting periods commencing on or after 1 January 2022, although partnerships formed on or after 1 July 2021 will be in scope immediately on formation where they conduct activities that trigger economic substance requirements. These further details were contained in GSCCA Circular 18 issued on 11 May 2021 and the extension of economic substance requirements to partnerships is being implemented in Guernsey, as well as the other Crown Dependencies and the Overseas Territories, pursuant to commitments to adopt economic substance requirements made to the EU Code of Conduct Group on Business Taxation. These changes will be most relevant to the funds industry in Guernsey, as a number of carried interest, co-investment, and special purpose structures involving Guernsey partnerships are likely to come in scope of economic substance requirements. The changes are also relevant to other structures that use Guernsey partnerships.

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