En Voyage - Issue #8

A LITTLE
CLARITY
BY JAMES ORRICK,
MANAGING DIRECTOR OF PEA GUERNSEY
When Arthur Miller wrote of the Salem
witch trials in The Crucible he was
applying a dramatic metaphor to the
communist witch hunt that was taking
place in America during the 1950s.
I have always admired Miller
for tackling the uncomfortable
through his work. Make no mistake:
I do not profess to be of his literary
standing by any stretch. However,
I want to draw from his courage to
confront a populist topic head on.
My subject matter is slightly different
to Miller’s. I am writing to clarify
what takes place in Guernsey’s
investment funds industry to counter
some of the current misperceptions.
Experience tells me that Guernsey is
a well-established financial services
jurisdiction and I want to share this to
help shed some clarity on this topic.
So, where to begin? Guernsey plays
an important part on the world stage
by facilitating the investment of funds
drawn from around the world into
European financial markets. The return
to the investors is subject to tax in
their home country and the business
activity generated by the investment
in Europe is taxed in the jurisdiction
where that activity takes place.
Globalisation for the investment
funds sector sees funds that run
through Guernsey invest in a wide
range of projects that include
delivering sustainability, innovation
and important infrastructure
to developed and developing
countries. Advances in healthcare,
renewable energy, technology and
infrastructure are made possible
because of the international flow
of investment. Guernsey’s financial
services professionals offer appealing
expertise in these areas and beyond.
No financial services jurisdiction,
whether on-shore or offshore, has
shown itself to be immune from
scandal. Take Global Laundromat and
Amazon as just two operations to have
hit the headlines for alleged money
laundering and tax avoidance onshore.
Indeed, these are global issues
which need to be tackled unilaterally,
collectively and collaboratively.
So, what are the drivers for investors
and fund managers in the investment
funds space to choose Guernsey?
Let’s start with what’s not on the list:
1. Tax is not on the list of incentives.
As I’ve explained the businesses that
the fund invests in and the investors
themselves are taxed where they
are based. Any workflow through
Guernsey will not add an additional
tax requirement however neither
does it remove those that exist.
2. Neither does fund business
come here to hide. Regulation
shapes every aspect of how we
work. All investment vehicles are
subject to regulatory oversight in
Guernsey through the Guernsey
Finance Services Commission.
This uniform approach is not the
case for many onshore countries.
Guernsey has embraced global
regulation like FATCA and the
OECD’s Common Reporting
Standard and is fully compliant.
At PEA our experience indicates
the following three drivers for
choosing Guernsey as a good
place to structure funds:
1. The scope of investment. Offshore
funds are made distinct from
onshore funds through the eclectic
range of investors and investments
from a variety of different countries.
This scope is something that is
complicated for an onshore fund
to achieve. It’s easier to facilitate
a multi-jurisdiction investor base
via one independent location.
2. Investors in funds favour the
opportunity that exists here to
spread their financial risk across
the multiplicity of investment
options that are available to them.
3. Investors take comfort that they
are dealing with a reputable centre
that is well run. With a 50-year
track record, industry-leading
regulation and a multiplicity of
advisors on hand to administer
and provide advisory support,
Guernsey offers a close-knit and
experienced infrastructure.
New funds continue to launch in
Guernsey and there continues to
be an increase in the migration of
structures to Guernsey that seek a
better regulated environment which
their investors expect. Guernsey
has a continued commitment to
meeting EU standards on matters
of tax transparency and economic
substance and, in the past, has
voluntarily submitted its tax regime for
evaluation by the EU and was found
to be fully compliant with EU rules.
Transparency, openness and
global compliance are among
the key features of our industry.
Long may this be the case. After
all, these are the features that our
clients have come to expect.
Private Equity Administrators Limited is regulated by the Guernsey Financial Services Commission and
licensed under both The Protection of Investors (Bailiwick of Guernsey) Law, 1987 and The Regulation of
Fiduciaries, Administration Businesses and Company Directors, etc (Bailiwick of Guernsey) Law, 2000.
www.peadm.com
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