Guernsey has three contrasting methods of taxing the profits of a company:-
Any company incorporated in the Island or elsewhere may apply to be registered as exempt from Guernsey Income Tax if the beneficial owner is not resident in Guernsey and the business activities are carried on outside the Island.
Board Meetings may be held in Guernsey and local residents may be directors.
The annual exempt status fee is o500 and in the case of companies formed during a calendar year, this is reduced pro rata to the number of months remaining to the end of the year of incorporation.
A Guernsey resident company pays income tax of 20% on its taxable profits wherever they arise, and is deemed resident if its shares are owned by a resident of the Island or if it conducts any substantial part of its activities in Guernsey.
It would normally appoint a majority of Guernsey resident directors and also hold most of its Board Meetings on the Island.
The Income Tax (International Bodies) (Guernsey) Law 1993 introduced the International Company which is an additional means for foreign investors to use a Guernsey based company on a tax efficient basis.
Although an International Company is treated as resident for the purposes of the Income Tax Law and must comply with the law, for example, in the computation of business profits, it does not pay the standard 20% rate of tax. The percentage of tax paid is discussed with the Income Tax Authority and agreed at a rate above zero but not more than 30%. Once set, the rate is fixed for a five year term.
This article provides a general outline on the subject at the time of writing. It is not intended to be exhaustive nor to provide legal advice in relation to any particular situation and should not be acted on or relied upon without taking specific advice.