12 January, 2021
On 29 December 2020, Jersey's Minister for External Relations lodged two amendments to the Economic Substance legislation.
The first amendment brings self-managed funds within scope of Economic Substance rules in terms of their fund management activities, for accounting periods that commence on or after 1 January 2021.
The Crown Dependencies' joint guidance had already been updated in November 2019 to confirm the expected inclusion of self-managed funds and legislation has already been amended in Guernsey (October 2020) and the Isle of Man (December 2020).
The amending legislation also strengthens the general exemption for other fund vehicles, currently provided in guidance, by explicitly introducing this exemption into legislation.
The extension of the Economic Substance test to self-managed funds had been expected for some time and many will already have reviewed operating procedures to ensure they are well positioned to comply with the legislation.
Notably, self-managed funds will be subject to the Economic Substance test even where they are not in receipt of gross income.
That the legislation takes effect from 1 January 2021 is to be welcomed, ensuring businesses with a 31 December year end will be considering the whole of 2021 when assessing their compliance.
The strengthening of the general exemption for other fund vehicles is also a welcome point of clarification.
If you have any questions in relation to the above, please do not hesitate to contact any of the individuals listed below or your usual PwC contact.