The jurisdiction of Guernsey offers a very pleasing environment to live in as well as very attractive personal and corporate tax regimes. In the article below we explore the potential tax efficiencies which individuals could benefit from when moving to Guernsey.
The island of Guernsey is the second largest of the Channel Islands, which are situated in the English Channel close to the French coast of Normandy.
Guernsey – a tax efficient jurisdiction
Guernsey is a leading international financial centre with a good reputation and excellent standards:
- The general rate of tax payable by Guernsey companies is zero*.
- There is no capital gains tax, inheritance tax, value added tax or withholding tax.
- Income tax is generally a flat rate of 20%.
* Please contact the Dixcart office in Guernsey for further information regarding the limited exceptions to the zero rate of corporation tax.
New residents to Guernsey: an attractive tax cap
New residents to Guernsey, who purchase an ‘open market’ property, can enjoy a tax cap of £50,000 per annum on Guernsey source income in the year of arrival and subsequent three years, as long as the amount of Document Duty paid, in relation to the house purchase, is at least £50,000.
Tax residence and additional tax advantages
For Guernsey income tax purposes an individual is ‘resident’, ‘solely resident’ or ‘principally resident’ in Guernsey. The definitions relate primarily to the number of days spent in Guernsey during a tax year and, in many cases, also relate to the days spent in Guernsey in several preceding years. Precise definitions and current tax rates and allowances are available on request, from the Dixcart office in Guernsey.
- An individual who is resident, but not solely or principally resident in Guernsey, can elect to be taxed on Guernsey source income only, subject to a minimum charge of £30,000. Any additional income, earned outside Guernsey, will not be taxed in Guernsey.
- Alternatively, an individual who is resident, but not solely or principally resident in Guernsey, can elect to be taxed on his or her worldwide income.
Special provisions are available for those who are resident in Guernsey solely for employment purposes.
On-going attractive tax caps for individuals
Guernsey has its own system of taxation for residents. Individuals have a tax-free allowance of £11,000. Income tax is levied on income in excess of this amount at a rate of 20%, with generous allowances.
‘Principally resident’ and ‘Solely resident’ individuals are liable to Guernsey income tax on their worldwide income.
- ‘Resident only’ individuals are taxed on their worldwide income or they can elect to be taxed on their Guernsey source income only and pay a standard annual charge of £30,000.
- Guernsey residents falling under one of the three residence categories above can pay 20% tax on Guernsey source income and cap the liability on non-Guernsey source income at a maximum of £130,000 OR cap the liability on worldwide income at a maximum £260,000.
In addition the following taxes are not applicable:
- No capital gains taxes
- No wealth taxes
- No inheritance, estate or gift taxes
- No VAT or sales taxes
Immigration to Guernsey
The following individuals do not generally need permission from the Guernsey Border Agency to move to the Bailiwick of Guernsey (which includes the Islands of Guernsey, Sark and Alderney):
- British citizens.
- Other nationals of Member States of the European Economic Area and Switzerland.
- Other nationals who have permanent settlement within the terms of the Immigration Act 1971.
An individual wishing to move to Guernsey, who does not have an automatic right to live in Guernsey, must fall within one of the following categories:
- Spouse/partner of a British citizen, EEA national or settled person.
- Person intending to set themselves up in business.
- Writer, artist or composer.
Any other individual wishing to move to the Bailiwick of Guernsey must obtain an entry clearance (visa) prior to his/her arrival. The entry clearance must be applied for through the British Consular representative in the individual’s country of residence. The initial process generally starts with an online application via the British Home Office website.
Find out more about living in Guernsey.