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European Commission Revises Tax Blacklist – Robus Client Update Samantha Horsepool - Robus in General Interest, Taxation on 29th July 2015

Background

In June this year the European Commission released a list of ‘non-cooperative tax jurisdictions’, based on EU member states’ national lists. Any jurisdiction which featured on at least 10 member states lists was included in the EU’s master list.

Guernsey featured on this list, as it was allegedly nominated by 10 member states; however Poland’s nomination was actually for the island of Sark, which is part of the Bailiwick of Guernsey. The States of Guernsey argued that it was not responsible for the legal or tax affairs of Sark, and thus Guernsey was not eligible for inclusion on the EU’s list.

This issue has of course not been limited to Guernsey; other offshore financial centres such as Bermuda, Cayman Islands and the British Virgin Islands have also fought back against their own statuses as ‘non-cooperative’.

Purpose of this Update

Robus has received some queries regarding the international reputation of Guernsey as a result of the release of the EU blacklist, and it is hoped this Client Update will assist in alleviating any fears or reservations regarding doing business on the island.

Tax Transparency

Guernsey, as well as the aforementioned offshore centres, has adopted measures to comply with the US Foreign Account Taxation Act (“US FATCA”), the Taxation (International Tax Compliance) (Crown Dependency) Regulations 2014 (“UK FATCA”), and is preparing legislation to comply with the upcoming Common Reporting Standard. As well as these, it has committed to the global standard on Automatic Exchange of Information (“AEOI”) to support the fight against tax evasion.

International Support

Since the release of the ‘blacklist’, the States of Guernsey has been campaigning for the island’s removal from the list, and found strong support within the UK government at the British-Irish Council in Dublin in the days following the news. The Polish Embassy in London soon publicly confirmed that Guernsey was not on its blacklist, having been removed in April 2013, and that it should be considered separately to Sark.

On an unrelated visit to Guernsey, the German Ambassador said that “transparency and a willingness to cooperate is clearly visible here”, and praised the island for the transparency measures it had in place.

Whilst not commenting on Guernsey’s case specifically, the Organisation for Economic Co-operation and Development (“OECD”), the international body and standard-setter for tax matters, announced that it was concerned that the standards used for the national lists were unclear, and it could not determine how these standards then related to those used by the OECD’s Global Forum. Their statement confirmed that:

“As the OECD and the Global Forum we would like to confirm that the only agreeable assessment of countries as regards their cooperation is made by the Global Forum and that a number of countries identified in the EU exercise are either fully or largely compliant and have committed to AEOI, sometimes even as early adopters. Without prejudice to countries’ sovereign positions, we are happy to confirm that these jurisdictions are cooperative and we would like to commend the tremendous progress made over the past years as well as the cooperation and integrity of the Global Forum process.”

Following this release, the European Commission admitted that there were “inconsistencies” in the criteria used for national blacklists, meaning the nominations were not on a level playing-field.

EU Revises Blacklist

Yesterday it was announced that the European Commission has revised its position, clarifying that it now does not consider the list as a ‘blacklist’ and it should not be used as such by organisations. It has changed the name of the list to ‘Tax good governance in the world as seen by EU countries’. Brussels has also confirmed that Guernsey is deemed as co-operative. It is expected that the list will be revised at the end of the year to allow for coordination of criteria used by EU member states.

Conclusion

We at Robus are of course delighted at this most recent development, which reinforces our belief that Guernsey is a great place to do business. The amount of international support and recognition that was found in the international arena following the original publication has been testament to Guernsey’s reputation as an open, transparent and cooperative jurisdiction.

We hope this update has provided a good understanding of the circumstances surrounding the headlines, and we are here to answer any questions you may have.

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