Guernsey

Guernsey Managed Companies

Tax Planning Jurisdictions

Guernsey had an extensive overhaul of its tax system back in 2008, primarily as it feared being 'black-listed' by the Organisation of Economic Co-operation and Development (OECD) as having "harmful tax practices". The result was the replacement of the previous international tax exempt companies with a "Zero-10" tax regime, which despite its name applies to a sliding scale of individual taxation for companies (technically there are no specific corporate taxes) between 0% and 20% where:

  • The Zero Individual Corporate Tax Rate applies to the vast majority of standard Guernsey companies;
  • The 10% Individual Corporate Rate is applicable for certain banking operations, domestic insurance businesses, fiduciary businesses, insurance intermediary and management businesses;
  • The 20% Individual Corporate Rate is applicable to local Guernsey utility companies and profits arising from local rental and development activities.

Notwithstanding the above, it should be noted that Guernsey continued to face problems with the OECD until it introduced a 'deemed distribution' of dividends scheme to all locally managed companies where-by local residents were prevented from 'rolling-up' profits in Guernsey companies and avoiding the 20% individual tax rate for individuals. In précis, Guernsey companies are no longer favoured for companies carrying out international trading as they run into immediate difficulty due to the almost complete lack of a tax treaty network with the rest of the world. However, they can still be used as passive holding vehicles and the well regulated/respected local professionals often prove attractive to those who emanate from less regulated or safe environments. At a personal level, whilst Guernsey may not have the attractiveness it once had, it nevertheless remains very attractive for those physically taking up residence as apart from the 20% income tax there are no capital gains, wealth or inheritance taxes. In addition, for those earning income from abroad it is possible to elect to pay an annual levy of £27,500.00, which enables them to pay tax on a remittance rather than on a worldwide income tax basis.

Synopsis

Guernsey is a potentially very attractive jurisdiction for wealthy individuals and also for Guernsey trust and Guernsey private interest foundation (Introduced under the Foundations (Guernsey) Law, 2012, which came into effect in January 2013) administration but not as an international trading company location.

Star Ratings

Corporate registration efficiency

5

Cost

4

Confidentiality

5

Local Banking facilities

5

Legal system

5

Political stability

5

Reputation

5

guernsey

Location

Guernsey is located just off the Northern French coast very near to the smaller island of Alderney and the largest of the British Channel Islands, namely Jersey. All of the Channel Islands are British Crown Protectorates but not part of the United Kingdom or European Union.

Relationship with the UK

Guernsey is a Crown Protectorate with an autonomous local government – The local population are mostly of either French (indigenous) or British ethnic backgrounds with French culture being quite prominent. The local currency is pegged to the British Pound issuing distinctive local notes and coins.

Vessel Registration

Guernsey is one of the major luxury yacht/motor boat registration areas in Europe with competitive registration fees and local management facilities. All Guernsey registered vessels have the right to fly the British 'Red Ensign' Flag but the fact that Guernsey is not part of the EU VAT system can cause problems in certain circumstances. For more information please discuss with a SCF Consultant

Benefits

  • Pro-business environment
  • No capital gains or inheritance taxes
  • Zero corporate taxes for most companies
  • Favourable trust and private interest foundation area
  • Highly reputable local licensed professionals
  • English speaking
  • No VAT
  • Excellent communications
  • Favourable treatment of overhead trusts
  • It is a common law jurisdiction
  • Company law based on UK Companies Acts
  • Not part of the EU
  • All major UK banks represented
  • Major vessel registration 'flag of convenience' area
  • Good confidentiality provisions
  • OECD Compliant jurisdiction

Double Taxation Treaty Network

Guernsey does not have a double taxation treaty network save for treaties with the United Kingdom, France and some part treaties with countries such as Ireland.

Administration & Accountancy Services

Managed Companies

SCF Accountancy & Law can provide Guernsey private interest foundations, trusts and companies either in a resident or non-resident format.

Set-Up & Annual Maintenance Fees

Please see the separate Guernsey Managed Company Quotation Leaflet

The Ownership of Guernsey Companies

'Overhead' Discretionary Trusts or Private Interest Foundations

For tax planning reasons, normally pertaining to anti-avoidance provisions in a beneficial owner's 'home' country or place of fiscal residence, and/or because of a need to 'ring fence' assets many clients owning a Guernsey company select to have it owned not by themselves but by an overhead discretionary trust or private interest foundation (PIF) which can be located in a jurisdiction such as Liechtenstein (locally known as a Stiftung), the Seychelles or even of course Guernsey itself.

For more information on discretionary trusts and/or private interest foundations please refer to the separate information leaflets.