EU Finance Ministers (ECOFIN), at their meeting on 5 December 2017, adopted conclusions on the outcome of the year long screening process of the tax regimes of 92 non-EU jurisdictions against criteria agreed by ECOFIN in November 2016. Guernsey and Jersey are in a group of 47 jurisdictions out of the 92 which have committed to address concerns identified by the Code Group. In the case of Guernsey and Jersey, these concerns related to the need to further strengthen economic substance requirements. The ECOFIN conclusions state:
“The outcome of this process demonstrates the extent to which all these  jurisdictions are engaged in a constructive dialogue with the EU, how they are committed to complying with EU and international tax standards and finally highlight the positive relationship that the EU has built with all these jurisdictions. These jurisdictions have therefore been determined as co-operative, subject to the successful delivery of their commitments.”
Speaking after ECOFIN, the Chief Minister of Jersey, Senator Ian Gorst, said:
“This outcome reflects the Island’s commitment to the highest standards of tax transparency and information exchange. We cooperated fully with the Code Group throughout the screening process, and have actively pursued a good neighbour policy in our relations with the EU. These positive interactions have borne fruit.
I have every confidence that the Island will continue to be an international financial services centre of choice, working as a partner with the EU and other global organisations to meet the highest regulatory standards.
I am pleased that Jersey has been rightly acknowledged for its cooperation in international tax transparency and compliance with BEPS requirements. We have committed to working with the Code Group on their concerns over economic substance and they have fully accepted that commitment. I look forward to entering into substantive dialogue in the New Year.
Our discussions may include creating enhanced reporting obligations or changes to our legislation on economic substance. We have already begun the necessary preparations, having regard to the Code Group requirements and Jersey’s best interests. I am committed to ensuring that, working with the finance industry, this process will be completed by the end of 2018.”
See here for full Government of Jersey press release.
The Chief Minister of Guernsey, Deputy Gavin St Pier, said:
“This clear reaffirmation from the EU that Guernsey is a cooperative jurisdiction is very welcome, fully justified and should be of no surprise to anyone who knows us. As part of our commitment to meeting international standards, Guernsey has for many years engaged willingly with the EU and the Organisation for Economic Cooperation and Development (OECD) on tax transparency and economic substance, and has taken a number significant steps to demonstrate its active commitment to both. This latest process has rightly recognised this.
Guernsey has long called for a fair, consistent and objective EU approach in its treatment of both EU and non-EU jurisdictions. I am heartened that EU Tax Commissioner Moscovici, who I met in Brussels just a couple of weeks ago, has publicly called for the new EU list to replace the outdated and inconsistent national “blacklists” maintained by some EU Member States. The evaluation process has led to the Code Group setting out a number of broad areas where it would like cooperative non-EU jurisdictions, such as ours, to take further steps to support economic substance. Guernsey is already committed to the OECD’s anti-Base Erosion and Profit Shifting (BEPS) action plan on economic substance, has put in place country-by-country reporting, and in June of this year was a signatory to the BEPS multi-lateral instrument.
We look forward to engaging directly with the Code Group early in 2018 in order to identify steps to further strengthen our approach to economic substance. We are committed to ensuring that we implement those steps in the next 12 months.
We welcome the agreement at the recent Global Forum Plenary to establish a voluntary group comprising the interested members of the Global Forum, the BEPS Inclusive Framework and the EU Code of Conduct Group to work together to ensure an objective and consistent understanding and application of the criteria used by the EU on the basis of the principle of level playing field, and to draw on the work of the Global Forum and of the OECD Forum on Harmful Tax Practices. This level playing field should include consideration of application to the EU Member States themselves.
Guernsey is choosing to continue to meet EU tax good governance standards. This means that there should be no reason for the EU to have concerns over Guernsey as a location into which the European Investment Fund can continue to comfortably invest, nor to have any tax related concerns when considering our access to the EU market in the future on the basis of equivalence, when provided for in EU legislation. We therefore also hope too that the Commission will soon grant the AIFMD third country passport which the European Securities and Markets Authority has recommended.
Guernsey has demonstrated that it is possible to balance transparency with privacy, and economic substance with competitiveness. We will maintain that approach.”
See here for full States of Guernsey press release.