It is now six months since Jersey joined representatives of more than 70 jurisdictions at the OECD Headquarters in Paris to sign an agreement designed to prevent corporate profit shifting.

The signing of the so-called 'Multilateral Instrument' (MLI) formed a key part of the OECD's Base Erosion and Profit Shifting (BEPS) project, and was a major step forward in terms of establishing a common understanding of what constitutes responsible corporate tax behaviour.

On 16th December, Jersey will have been an Associate and Member of the BEPS Inclusive Framework for six months, following the inaugural meeting in June - this reflects Jersey's commitment to be BEPS-compliant and its desire to contribute to policy dialogue as the BEPS project develops.

It is an approach which puts Jersey on a level pegging with OECD, G20 and many other countries and jurisdictions and reinforces Jersey's reputation as a responsible international jurisdiction.

As we look forward to 2018, the concept of substance, which underpins the BEPS principals, looks set to become increasingly important – including within the alternative fund management community.

In fact, the BEPS agreement refers specifically to 'Permanent Establishment' rules. These will capture fund managers and will put the issue of substance in fund jurisdictions right at the top of fund managers' agendas - particularly with Brexit and the need to maintain access to investor markets in the EU challenging the structure and operating models of managers.

Jersey's early formal adoption of BEPS puts it in a really strong position in this regard, underlining just how far ahead it is on the provision of substance for fund managers. This provides confidence to managers in respect of Jersey's commitment to provide a platform that can demonstrate real substance and meet the criteria as set out by BEPS.

Jersey already has a presumption towards requiring operations of substance that stretches back far beyond BEPS – the number of fund promoters based in Jersey has grown by some 100% over the past five years.

In particular, the managers that are here include some of the most significant names in the alternative fund management space.

Of these managers are undertaking a full spectrum of fund management, risk and portfolio management functions, and are supported by a large pool of skilled and readily available staff that are specialists in alternatives – not necessarily found in centres onshore.

In particular, Jersey offers a workforce of some 13,000 people, including 2,000 employees in fund management and legal services. The Jersey landscape features 44 fund administrators, 15 custodians, 27 banking groups, 26 transfer agents, 10 accountancy and auditing firms, 10 legal firms dealing specifically with fund matters, and a wealth of non-executive directors with expertise across a variety of asset classes.**

There are very few other jurisdictions which can compete with that sort of depth and breadth of alternative fund experience and capability.

In addition, Jersey's straightforward and transparent tax neutral platform, which offers huge advantages for funds operationally, is much more geared towards satisfying BEPS criteria. In a new-look BEPS environment, centres that rely on complex tax treaty arrangements are likely to come under much more scrutiny in terms of proving substance and economic activity taking place.

In light of the very recent announcement by Jersey's government that it will be looking to implement new measures to reinforce Jersey's commitment to economic substance through 2018, the message is very clear – Jersey intends to provide a genuine home of substance to alternative fund managers for the long-term.

In the run up to March 29th 2019, fund managers looking at their Brexit contingency plans are likely to be having plenty of conversations about jurisdictions that can provide them with a home of substance.

Given Jersey's commitments to BEPS, the recognition it has earned from the EU recently as a cooperative jurisdiction, and the OECD's recent endorsement of Jersey as an entirely tax compliant centre, it is ready and able to give fund managers the comfort they need around substance.

#JerseyforSubstance

#JerseyFunds

#HomeOfSubstance

**Figures taken from the JFSC Registry and Monterey Insight Report for Jersey 2017

Linkedin - www.linkedin.com/company/jersey-finance
Twitter - @jerseyfinance
Youtube - www.youtube.com/jerseyfinance

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.