The Bailiwick of Guernsey consists of several islands - including Guernsey, Alderney, Herm and Sark. Guernsey and neighbouring island Jersey are commonly referred to together as the Channel Islands, and whilst they are similar they each govern their own laws – including taxation.
Guernsey is a renowned financial centre for several reasons, with a key factor being tax neutrality.
Please see below details regarding the key tax considerations impacting both individuals and companies in Guernsey.
Guernsey includes all the islands in the Bailiwick except Sark for income tax purposes. Income tax in Guernsey is charged at a flat rate of 20%.
The personal allowance in Guernsey for 2023 is £13,025 per person.
Guernsey also provides multiple tax caps for individuals, the details of which are listed below:
- Guernsey Qualifying Income - £150,000 Cap
- Worldwide Income - £300,000 Cap
- New Arrivals Cap - £50,000 (can be claimed for first 3 years upon arrival, can only be claimed if £50,000 or more has been paid in document duty and the property is purchased within 12 months of arrival to the island)
There is no Capital Gains Tax, Inheritance Tax, Stamp Duty or VAT/equivalent.
The headline tax rate in Guernsey is 0%, which applies to all companies unless the company is taxable on income at a higher rate.
The company intermediate rate (10%) applies to income from business, which is regulated by the Guernsey Financial Services Commission.
The company higher rate (20%) applies to income from:
- Regulated utilities
- The importation / supply of gas or hydrocarbon oil
- Large retail business carried on in Guernsey (with a taxable profit of more than £500,000)
- The ownership of Guernsey land and buildings, i.e., Property development and exploitation of land (including income from the sale of extracted materials)
- Rental income
- Income from the business of cultivating or using the cannabis plant, and from the prescribed production or prescribed use of controlled drugs.
Effective from 2019, Guernsey – along with several other jurisdictions – implemented the Economic Substance Regulations. These can be complex in how they apply, however they generally result in ensuring that Guernsey resident companies perform specific activities within the Bailiwick.