Typically, individuals are subject to income tax at a flat rate of 20 percent. There are no taxes on capital gains, inheritance or gifts in Guernsey.
Liability for income tax
The basis of an individual’s Guernsey tax liability is determined by their residence status. The criterion is the number of days of presence in Guernsey (at midnight at the end of the day).
Tax trigger points
Guernsey income is taxed on a receipts basis. A non-resident individual is only liable to Guernsey tax on income which arises or accrues in Guernsey, with the exception of dividends, royalties, bank interest and non-executive directors’ fees.
A person who is resident (but not solely or principally resident) in Guernsey may elect to be assessed on Guernsey-sourced income only (subject to a minimum charge of GGP 27,500), with no allowances, reliefs or deductions available. Alternatively, they are liable to Guernsey income tax on their worldwide income with allowances, reliefs and deductions (including double tax relief) available.
An individual who is resident (but not solely or principally resident) who comes to Guernsey wholly or mainly for employment reasons, may elect to be taxed on Guernsey-sourced income plus remittances of non-Guernsey income sources.
A solely or principally resident individual will be taxable on their worldwide income with appropriate allowances, reliefs and deductions (including double tax relief) available. Alternatively, an individual who is solely or principally resident may elect to pay tax in accordance with the tax cap of GGP220,000 on worldwide income (subject to a maximum of GGP110,000 non-Guernsey income sources).
Types of taxable income
Employment/self-employment (including benefits-in-kind), bank interest, investment income, and rental income.
Guernsey has a flat tax rate of 20 percent for individuals. The standard rate of income tax on companies is 0 percent, with a rate of 10 percent applicable to certain banking profits and the profits of certain domestic insurance and fiduciary businesses. A rate of 20 percent applies to businesses regulated by the Office of Utility Regulation, and to profits derived from the exploitation of land and buildings situated in Guernsey.
Guernsey tax residence flowchart for individuals
Liability for social security
Any employee working in Guernsey must register for Guernsey social security. In 2014, employees are subject to contributions of 6 percent of their gross salary capped at GGP662.22 per month. Employer’s contributions of 6.5 percent of their gross salary are capped at GGP717.41 per month. Reciprocal agreements with some jurisdictions allow an individual on a temporary secondment to continue to pay contributions in their home jurisdiction.
The tax year is a calendar year.
Employee compliance obligations
Individuals are required to complete and file an annual personal tax return by 30 November of the following year. Individuals who are not already registered are required to inform the Director of Income Tax of their liability to Guernsey tax by 14 July following the year in which any chargeable income arises.
Tax returns must be filed by non-residents who are in receipt of Guernsey-sourced income (except for dividends, royalties, bank interest and non-executive directors’ fees).
Employer reporting and withholding requirements
Tax and social security contributions are withheld from employment income and are separately reported to both departments either monthly or quarterly, depending on the size of the company.
Double taxation treaties
Guernsey has double taxation agreements with a number of countries, providing either exemptions from tax in one jurisdiction or relief from double taxation by way of credit.
Permanent establishment implications
Companies are resident in Guernsey if they are incorporated in Guernsey or if they are controlled in Guernsey (i.e. the majority shareholders are resident in Guernsey).
A permanent establishment (PE) of a company which is non-resident for Guernsey tax purposes is subject to Guernsey tax on the profits of that PE arising in Guernsey.
Guernsey currently has no value-added tax (VAT) or goods and services tax (GST). There are indirect taxes on consumables such as tobacco, alcohol and petrol.
Guernsey has no specific transfer pricing legislation, though it does have general anti-avoidance legislation.
Work permit/visa requirements
The Guernsey housing market is divided into open market and local market sections. The open market amounts to approximately 10 percent of the total housing in Guernsey and is around 40 percent more expensive than local market housing.
European Union (EU) citizens moving to Guernsey must obtain a Guernsey housing license in order to occupy a local market property, and these generally last for a maximum of 5 years, although longer licenses may be granted in some circumstances. Anyone can move to Guernsey if they buy and occupy an open market home, and any EU citizen occupying an open market home is eligible to work in Guernsey.
If recruiting from outside the EU, proof of recruitment efforts within Guernsey, the United Kingdom and the EU must be provided and the work permit available is generally for a maximum of 4 years. There are also certain restrictions on accompanying partners/family members.
Local data privacy requirements
Guernsey has data privacy laws.
Guernsey has no exchange controls.
Non-deductible costs for assignees
Benefits provided to employees are generally taxable as salary unless specifically exempted. Specifically exempted benefits include:
- the first GGP450 of benefits provided in a year
- employer’s contributions to an approved pension scheme
- business related entertaining
- actual reasonable expenditure incurred in removal to Guernsey and the setting up of a property in Guernsey by a newly recruited/transferred employee
- the first GGP12,940 (2013) of a disturbance allowance paid to such an employee
- provision of temporary accommodation and/or travelling expenses for up to the first 4 months from commencement of employment (subject to a limit of GGP5,000)
The provision of accommodation to an employee is a taxable benefit in Guernsey. The benefit is calculated as the lower of the open market rental value of the property and 15 percent (for unfurnished accommodation) or 17.5 percent (for furnished accommodation) of the employee’s total assessable remunerations.