Tax

Residence and domicile

How does an individual become taxable in your jurisdiction?

Tax residence is established purely on the basis of the number of days an individual spends in Guernsey in a tax (calendar) year. Generally, an individual who spends more than 91 days in Guernsey during the tax year will be treated as resident. This reduces to 35 days for those who have spent 365 days or more in Guernsey in the previous four years.

An individual who is resident but who spends 181 days or less in Guernsey and more than 91 days in another jurisdiction is treated as ‘resident only’ and is entitled to pay a reduced standard tax charge (see below).

Income

What, if any, taxes apply to an individual’s income?

Income tax is levied on the worldwide income of residents at a flat rate of 20 per cent, subject to personal reliefs and deductions. However, tax is capped at £130,000 on non-Guernsey source income, and £260,000 on worldwide income (other than Guernsey property income).

Individuals who are resident-only can elect to pay either a standard charge of £30,000, or 20 per cent of their Guernsey source income, if higher. No further income tax liability will be due.

An individual paying the tax cap or standard charge is able to file a simplified return that may mean that he or she is not obliged to declare all the details of all his or her income (although the Revenue Service retains the power to call for this).

Personal allowances and similar deductions are abated for individuals earning over £100,000 per annum.

Capital gains

What, if any, taxes apply to an individual’s capital gains?

There is no capital gains tax in Guernsey.

Lifetime gifts

What, if any, taxes apply if an individual makes lifetime gifts?

There is no gift tax in Guernsey.

Inheritance

What, if any, taxes apply to an individual’s transfers on death and to his or her estate following death?

There is no inheritance tax in Guernsey.

Real property

What, if any, taxes apply to an individual’s real property?

Document duty is charged on the acquisition of Guernsey real estate at rates of up to 5.5 per cent based on the value of the property acquired.

Non-cash assets

What, if any, taxes apply on the import or export, for personal use and enjoyment, of assets other than cash by an individual to your jurisdiction?

No taxes apply in this regard.

Other taxes

What, if any, other taxes may be particularly relevant to an individual?

Guernsey has no other taxes, such as value added tax or goods and services tax, that may be particularly relevant to an individual.

Trusts and other holding vehicles

What, if any, taxes apply to trusts or other asset-holding vehicles in your jurisdiction, and how are such taxes imposed?

The income of settlor interested trusts (with Guernsey resident settlors) is taxed on the settlor. Trustees of other trusts with Guernsey resident beneficiaries are subject to tax on the trust income. Other trusts are not subject to tax.

Distributions from trusts received by Guernsey residents are taxed in the hands of the beneficiary. However, credit is given for tax already paid by the trustees (or settlor).

Charities

How are charities taxed in your jurisdiction?

Guernsey registered charities are not subject to tax on income that is applied for charitable purposes.

Anti-avoidance and anti-abuse provisions

What anti-avoidance and anti-abuse tax provisions apply in the context of private client wealth management?

Guernsey has a wide general anti-avoidance rule that potentially disregards the effect of any transaction that reduces or defers liability to Guernsey income tax, regardless of intention. However, this provision is used sparingly. The Guernsey Revenue Service often publicly identifies situations where it would consider applying the provision, to discourage avoidance, rather than seek to apply the provision retrospectively.