Guernsey updates economic substance regulations for self-managed funds

It was announced on 10 September 2020 by the Director of the Revenue Service in Guernsey that changes to the Income Tax (Substance Requirements) (Implementation) Regulations, 2018 will be made by the Income Tax (Substance Requirements) (Implementation) (Amendment) Regulations, 2020 (collectively, the "Regulations") to bring self-managed collective investment vehicles within the scope of the Regulations with effect from 1 October 2020.

Funds regulated by the Guernsey Financial Services Commission under the Protection of Investors (Bailiwick of Guernsey) Law, 1987 are not subject to the economic substance requirements. However, it was understood from Revenue Service guidance that self-managed collective investment vehicles (being companies which are collective investment vehicles within the meaning of the Income Tax (Exempt Bodies) (Guernsey) Ordinance, 1989 and which have no other person or body conducting fund management in respect of them) would come within scope at some point.

From 1 October 2020, self-managed collective investment vehicles will be subject to the economic substance requirements as if they carried on the relevant activity of 'fund management' and received income from that activity. As a consequence, such vehicles will be required to demonstrate that they have economic substance in Guernsey, although this will not change their tax position.

Please see our Economic substance briefing for further information.