Guernsey Withdraws Covid-19 Economic Substance Guidance

Introduction

The States of Guernsey’s Revenue Service is withdrawing the temporary guidance that it issued on 25 November 2020 in relation to the application of Economic Substance Requirements during periods where government imposed travel restrictions (including those in other jurisdictions) were in place in light of the Covid-19 pandemic (the “Covid-19 Guidance”). Our previous briefing on the Covid-19 Guidance can be found here (Walkers - Covid-19 Implications for Economic Substance in Guernsey).

The Covid-19 Guidance will be withdrawn for accounting periods commencing on or after 1 November 2022.

Click to view article

Walkers’ Comment

The Covid-19 Guidance was always a temporary measure, and now that travel restrictions have been lifted in most jurisdictions it is not surprising that the Covid-19 Guidance is being withdrawn.

It is welcomed that the withdrawal applies to accounting periods commencing on or after 1 November 2022, as this allows businesses to plan ahead to ensure compliance with Economic Substance Requirements, and means that the Covid-19 Guidance will continue to apply for current accounting periods (although businesses should look to be holding board meetings in Guernsey now that travel restrictions have generally lifted).

Businesses should be reminded that under the Covid-19 Guidance it was expected that Covid-19 measures only impact the ability of a company (and now a partnership) to comply with the directed and managed requirement. It was still expected that a company (and now partnership) would continue to meet the other economic substance requirements, including the “core income generating activities” requirement.

About Walkers’ Channel Islands regulatory team

Walkers’ Channel Islands regulatory team is fully equipped to provide bespoke privileged legal advice and guidance in connection with all aspects of the Channel Islands’ regimes for economic substance.

We have a team of regulatory experts spanning all practice areas who regularly advise on all aspects of Guernsey regulation, including economic substance, tax, FATCA, CRS, financial services, AML, sanctions, and data protection.