A desperate need for local expertise

A desperate need for local expertise

Much more local expertise on boards of funds domiciled offshore is probably the only way that managers will be able to continue to operate there without incurring a substantially greater tax liability. 

New substance rules from the EU’s Code of Conduct Group (CoCG) are going to be a problem for offshore funds. Having a strong board, with well-qualified locally based directors on it, may well be the only way to allow the offshore fund industry to continue as at present – at least in the Crown Dependencies, which have committed to implantation of the EU’s substance rules. (It is not yet clear what Cayman will do.)

In future companies based in the Crown Dependencies will be required to show how they carry on their core income generating activities (CIGA) in the jurisdiction where they are domiciled. They will have to demonstrate a link between the activity carried on and the local economic substance which supports that activity.

To read more on this story see the November issue of The NED.

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