ECONOMIC SUBSTANCE www.captiveinternational.com
different approaches to how they view
business substance, it noted.
Speaking at the panel, Paul Owens,
managing director of the global captive
practice of Willis Towers Watson,
explains that BEPS is driving much of
what the sector should already be doing.
“Insurance companies should not
be a brass plaque on the door with
nothing there,” he says.
Guernsey lawyer Kate Storey,
partner at Walkers, adds: “This
is an opportunity once again to
the hurricanes that hit the region in
However, on May 25, the Bahamas
and Saint Kitts & Nevis were removed
after making high level commitments—
all of which will be carefully monitored
by the EU Code of Conduct Group.
The jurisdictions that remain on the
blacklist include: American Samoa,
Guam, Namibia, Samoa, Trinidad and
Tobago, US Virgin Islands.
Notable captive insurance domiciles
that fall into the grey list include
Anguilla, Bahamas, Barbados,
Bermuda, the British Virgin Islands,
the Cayman Islands, Guernsey, Hong
Kong, the Isle of Man, Labuan, St Lucia,
Saint Kitts & Nevis, Switzerland, and
Turks and Caicos Islands.
Economic substance and impact
In terms of the impact caused by the
EU’s blacklist, there are concerns over
whether reputations will be damaged
or that jurisdictions could even
face sanctions from the EU and its
individual member states.
Beyond being named, however, the
jurisdictions have faced few, if any
consequences from the blacklist.
However, the EU-driven debate over
substance in business activities could
strengthen the captive insurance
market, according to a panel at the
Guernsey Insurance Forum held in
October in London.
The debate around BEPS has
resulted in jurisdictions taking
iStock Photo / Tarzhanova
demonstrate that this sector has, and
always has had, substance.
“New substance requirements are
not a big deal for Guernsey—we have
always been a jurisdiction of substance
in insurance. We have 50 years of
history in insurance management.
“Pretty much every international
insurer uses an insurance manager
in Guernsey; we employ chartered
insurers and the skills are all there
within the management in Guernsey.”
Some argue that there are
inconsistencies in how the EU has
curated the blacklist and grey list,
particularly with jurisdictions that fall
within European borders.
In November 2017, Oxfam published
a report, Blacklist or whitewash?, which
showed that, according to the EU’s own
criteria, four countries within the EU
should be blacklisted but are not. These
countries are Ireland, Luxembourg, the
Netherlands, and Malta.
Oxfam criticised the EU list and
suggested that by taking aim at
countries outside the EU, this step has
strongly harmed the credibility of the
process—with Ireland, Luxembourg
and the Netherlands being among the
most powerful tax havens in the world,
enabling the largest corporations to pay
minimal tax. l
“The jurisdictions that
remain on the blacklist
include: American Samoa,
Guam, Namibia, Samoa,
Trinidad and Tobago, US
iStock Photo / Paul-Daniel Florea