Guernsey is the second largest of the Channel Islands with Jersey being the largest. Guernsey lies in the English Channel off the North West coast of France. It covers 24 square miles and has a population of approximately 65,000 with the principal center of business activity being St. Peter Port.
The Channel Islands have a unique constitutional arrangement with the UK. The Islands are possessions of the English Crown as distinct from colonial and overseas dependencies of the United Kingdom and accordingly the locally elected legislative assemblies have the exclusive right to legislate on matters of domestic concern to the Islands (including taxation) whilst the United Kingdom Home Office is responsible for the external affairs of the Islands.
The Islands are associated members of the European Community and as such are only subject to European law in so far as they specifically contract in to the European Community. Thus they have elected to become
part of the common tariff and agricultural levy system but are not subject to European law in most other areas.
The official language is English although French is still spoken and the legal system is based upon a mixture of English and French law.
Guernsey has signed double taxation agreements which provide for the exchange of information with the United Kingdom so UK residents should carefully consider whether Guernsey is the correct place in which to set up an offshore structure.
With the introduction of a new company law and a brand new company registry in 2008, Guernsey is a modern and cutting edge jurisdiction for company formation.
Companies which are owned by non-residents of Guernsey and do no business with Guernsey resident individuals or corporations can be incorporated in Guernsey and operate tax-free. Such companies have the following characteristics:-
Guernsey companies which have no activity in Guernsey will pay 0% tax in Guernsey irrespective of profit.
A minimum of one shareholder is required and corporate shareholders are permitted. Please note that details of the beneficial owner of the company must be communicated to the Guernsey authorities but that information is protected by secrecy provisions. Bearer shares are not permitted. A share register must
be maintained at the registered office address of the company and must be available for inspection by any member of the public. Details of shareholders are also maintained on the public fle at the Company Registry but anonymity can be preserved by the use of nominee shareholders. Documents can be sent electronically from the company to shareholders where agreed by the shareholder.
Most onshore countries have provisions within their tax legislation whereby any company, no matter where it is incorporated which is managed or controlled from within their jurisdiction will be tax resident there and taxable on its worldwide income at local rates. For example, any offshore company which had UK based directors would be tax resident in the UK and subject to UK tax on its worldwide income. Failure by the directors to declare the liability of the offshore company to UK tax would be an offense under UK law with potentially very serious financial and criminal consequences. Most onshore countries have similar provisions within their tax legislation so it will rarely be advisable for onshore resident clients to act as the directors of an offshore company. To establish that the management and control of the company takes place in Guernsey and the company is therefore tax resident in Guernsey we can, and habitually do, provide directors. In most cases this service is essential if legitimate tax savings are to be made.
A minimum of one director is required and corporate directors are permitted. Details of directors must be kept at the registered office and appear on the public fle kept at the Company Registry but anonymity can
be preserved by the use of third party directors.
The directors must file an Annual Validation Return with the Company Registry by 31st January each year. The Annual Validation gives details of the current directors and registered agent, the share capital of the company and confirms that the register of members is up to date. There is a fling fee of £500 payable. It should be noted that penalty fees are payable if a company fails to fle an Annual Validation by the due date.
Incorporation can be achieved within approximately 3 days. Ready made companies are not available as the requirement to reveal details of the beneficial owner before incorporation means that it is not possible to incorporate companies except upon the instructions of a client. However, subject to fulfilling certain conditions, 15 minute incorporation are available.
Names of limited companies must end with the word “Limited”. Names of unlimited companies must end with the word “Unlimited”. In regards to mixed liability companies, names must end with the word “Mixed Liability”. The company name must not be misleading as to the company activities.
As mentioned previously to establish that the management and control of the company takes place in Guernsey and the company is therefore tax resident in Guernsey we can, and habitually do, provide directors. In most cases this service is essential if legitimate tax savings are to be made. Fees for the provision of management services are included above.
We can assist with the opening of bank accounts for the company in most places in the world and our fees for attending to the account opening procedures would be from £650 plus the costs of preparing any additional notarized documentation which a particular bank may require.
As part of the domiciliary services package we provide a registered office address in the jurisdiction of the incorporation of your company in order to meet the local statutory requirement. An additional service is
the provision of an address, telephone and fax number to receive correspondence which can be the same as the registered offce address or another of our Group offices’ addresses. When we receive communications we will deal with them according to your wishes. Fees for the provision of this service are included above plus handling charges (£2 per item plus disbursements.
For those companies which are particularly active or wish to have a higher profile or more substance we can arrange the immediate allocation of a dedicated telephone line answered with the name of your company. Additional costs apply to this service.
Using a trust to own the shares of an offshore company can result in very substantial tax and non-tax related advantages which will accrue both on death and during the lifetime of the trust settlor. These advantages may be summarized as follows:-
Saving on Inheritance Tax: On death, the inheritance tax which would normally be assessed on the value of the shares would generally be eradicated.