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Guernsey

Company limited by shares

Guernsey is an internationally high-reputable jurisdiction with a track record of financial and political stability supported by a robust and mature financial and professional legal and accounting infrastructure.

Companies incorporated in the island benefit from a pragmatic regulation and an attractive tax regime. A 0/10 corporate tax rate, where corporations are subject to income tax at 0%, except businesses conducting financial services regulated by the Guernsey Federal Services Commission, which pay tax at 10%.

Furthermore, there are no taxes on capital gains, inheritance, capital transfer, wealth, value added nor general withholding taxes and exchange controls in Guernsey.

Single-owned companies are available, and ownership can be transferred easily. No authorized capital or capital maintenance requirements, other than a statutory solvency test on dividend distributions. In turn, this means no share premium account requirements and the ability to redeem or repurchase shares out of any capital account.

The incorporation process is a straightforward electronic registration, being possible to do it within 24 hours.

Guernsey companies are easy to manage and it is possible to indefinitely waive annual general meeting and audit requirements.

Its geographical proximity to London and the EU makes it an interesting jurisdiction to establish headquarter of companies doing business in the continent.

There is not a distinction between private and public companies and therefore any company limited by shares may offer their securities to the public.

Furthermore, the Channel Islands Securities Exchange is a recognised exchange for UK tax purposes and is an affiliated member of International Organization of Securities Commissions and is based in Guernsey.

Guernsey was a pioneer in the establishment of legislation of innovative corporate vehicles as protected cell companies and incorporated cell companies.

Protected cellular companies are entities made up of a core and a several ring-fenced protected cells, creating separate portfolios of assets and liabilities which are statutorily segregated.

Although the cells of a protected cellular company do not have a separate legal personality, assets and liabilities of each cell must be kept separated and separately identifiable from the assets and liabilities of the protected cell company (core) and of each of the others cell.

Cellular companies have both core capital and cellular capital, which is the capital invested in individual cells.

Creditors of a cell are unable to seek recourse from the assets of any of other cells or of the core. This corporate vehicle provides protection contagion to fund promoters as an umbrella unit trust.

In addition, this corporate structure provides several cost savings such as avoiding to setting up new entities, lower costs on corporate governance, company administration and compliance.

Incorporated cell companies, is similar to a protected cell company, but each cell is a separated legal entity. The rights of the shareholders in the cells of an incorporated cell company are fettered in that the board of each cell is the same as the board of the ICC. Cells cannot act independently of the incorporated cell company that created them, but allows each cell to act as independent legal entities with the capacity to contract amongst themselves.

The ICC submits a combined annual validation and only the core company is required to create separate accounts.

Both protected cell companies and incorporated cell companies have become a popular corporate vehicle with the investment fund industry and with the insurance industry, especially captive insurers.

Guernsey has started to undertake the first OECD automatic exchange of information (AEoI) through Common Reporting Standard (CRS) in 2017 and has signed over 50 tax information exchange treaties (TIEa) and 11 double taxation agreements (DTA).

All in all, Guernsey is a high-reputable low tax jurisdiction and an option to consider for international transactions and corporate structuring, for investment funds, co-investment vehicles, movable and immovable asset holding and financial services providers.

Taxes

Tax residency – A company is tax resident in the Guernsey if it is incorporated in Jersey or its place of central management and control is in Guernsey.

Basis – Resident companies are taxed on a worldwide basis, while non-resident entities are subject to tax on their income derived from Guernsey.

Tax rate – Corporate tax standard rate is 0%.

A 10% tax rate applies to companies conducting banking business, insurance business, custody services business, and licensed fund administration business. Some collective investment schemes and unit trusts may qualify for a tax exemption.

Utility companies such as telephone, gas and electricity companies pay income tax at a 20% rate.

Income from real property, such as rental income, property development profits or income from exploiting land is subject to a 20% tax.

Retail businesses with taxable profits over GBP 500,000 are taxed at 20%.

Companies that import or supply oil are also taxed at 20%.

Capital gains - Capital Gains are exempt from taxation.

Dividends -  Dividends are generally subject to tax at applicable rates.

Interests - Interest income is taxed at 0% tax rate.

Royalties – Royalty income is taxed at 0% tax rate.

Foreign-source income – Foreign-source income is usually taxable at applicable rates. Tax credits for foreign tax paid are usually available up to Guernsey tax payable.

Withholding taxes – There are no withholding taxes in Guernsey.

Losses – Losses arising from taxable income may be carried forward indefinitely. Carryback of losses is permitted under certain circumstances.

Inventory – Inventories are usually valued at lower of cost or net realisable value valuation. First in first out method (FIFO) is permitted, but the Last in first out method (LIFO) is not allowed for taxation purposes.

Anti-avoidance rules – Guernsey has not enacted transfer pricing regulations, but an anti-avoidance provision in tax law may be applied by the Comptroller of taxes if a transaction leads to avoidance or reduction of Guernsey income tax.

Thin capitalization and controlled foreign companies rules are not applicable.

Labor taxes – Employers must withhold a contribution to Social security fund at 6.5% on employees’ gross earnings up to GBP 138,684.

Personal income tax – An individual is considered solely resident in Guernsey if he or she spends 91 days in a year in the jurisdiction and do not spend more than 91 days in a year in another jurisdiction. An individual who spends 182 days or more in Guernsey is deemed to be principally resident. Individuals in Guernsey between 91 and 183 days are considered resident only.

Principally residents and solely residents are subject to tax on their worldwide income. Resident only individuals are taxed on their worldwide income, but they may elect to pay a flat GBP 30,000 in respect of non-Guernsey source income.

Personal income is subject to a 20% tax rate. Residents may opt for a tax liability cap of GBP 110,000 on non-Guernsey-source income, and the liability cap can be increased to GBP 220,000 on worldwide income.

Capital gains are not taxable.

Other taxes – There is no value-added tax in Guernsey.

Customs duties apply for goods imported from outside of the European Union.

A Stamp duty from 2% to 4% applies on the transfer of Guernsey real property.

There are no additional property taxes more than the 20% income tax payable from rental or development of land and property.

There are no inheritance and wealth taxes in Guernsey.

  • Offshore Income Tax Exemption
  • Offshore capital gains tax exemption
  • Offshore dividends tax exemption
  • CFC Rules
  • Thin Capitalisation Rules
  • Patent Box
  • Tax Incentives & Credits
  • Property Tax
  • Wealth tax
  • Estate inheritance tax
  • Transfer tax
  • Capital duties
  • 0% Offshore Income Tax Rate
  • 0% Corporate Tax Rate
  • 0% Capital Gains Tax Rate
  • 0% Dividends Received
  • 0% Dividends Withholding Tax Rate
  • 0% Interests Withholding Tax Rate
  • 0% Royalties Withholding Tax Rate
  • 2 Losses carryback (years)
  • Indefinitely Losses carryforward (years)
  • 6.60% Social Security Employee
  • 0.00% Social Security Employer
  • 20% Personal Income Tax Rate
  • 0% VAT Rate
  • 0 Tax Treaties

Country details

Guernsey
GBP
St Peter Port
Europe
e n , f r
65228

The Bailiwick of Guernsey is a dependency of the British Crown located in the English Channel, specifically to the west of the coasts of Normandy, France.

The territory comprises the island of Guernsey (which forms the largest part) and its neighboring islands Alderney (2400 inhabitants), Sark (610 inhabitants) and Herm (60 inhabitants), as well as other very small islands such as Jethou, Brecqhou, Burhou, Lihou and other islets.

Guernsey is part of the Channel Islands archipelago together with the Jersey Bailiwick. Although his defense is the responsibility of the United Kingdom the bailiwick is not part of it, but a possession of the British Crown.

Its population is about 65,000 inhabitants, of which 17,000 live in its capital, Saint Peter Port.

The native population has as its mother tongue French, more exactly a subdialect of the Norman dialect. However, the most widely used language today is English.

Its official currencies are the Guernsey Pound (GGP)) and the Pound sterling (GBP).

The head of state is the British queen Elizabeth II of the United Kingdom represented by the lieutenant governor.

The Guernsey Parliament, officially called the Deliberative States and chaired by the Bailiff, are composed of 45 deputies, elected in districts of one or more representatives every four years. There are also two representatives of Alderney, an independent dependency of the Bailiwick, but Sark does not send any representative. There are also two non-elected members, both appointed by the monarch as legal officers and without a vote.

About a third part of its gross national product is supported by financial services (banking, fiduciary, captive insurance and fund management). Other traditional sources of income are agriculture, tourism, optical, engineering and horticulture, mainly tomatoes and cut flowers. Major imports include coal, gas, oil, electricity, machinery and equipment.

Procedures

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