Guernsey: Banking – Why Use Guernsey?

Continued success – Guernsey’s banking sector has successfully grown during the past 50 years. This has developed experience, infrastructure and accumulated intellectual capital which ensures the Island remains at the forefront of the international banking industry.

The highest reputation and standards – Banking business can be transacted with confidence in Guernsey as the Island has been scrutinised and endorsed by the International Monetary Fund and the Financial Action Task Force.

A positive environment for banking

Pragmatic regulation – The Guernsey Financial Services Commission promotes a robust yet pragmatic regulatory regime.

Strong corporate governance – Guernsey has an experienced and qualified pool of non-executive directors.

Competitive tax environment – In Guernsey there is no withholding tax on dividends, no capital gains tax, no inheritance tax, no VAT and no income tax to pay on non Guernsey income accruing to trusts that have no Guernsey resident beneficiaries.

From 1 January 2008 there will be a zero rate of income tax for corporate entities except banks, which will be levied at a 10% rate for local business.

Banks do not deduct interest at source so taxpayers can defer their tax payable on interest earned until they declare it at the end of the year. Interest earned on Guernsey accounts should be declared to the tax authorities where the depositor is resident for tax purposes.

Innovative legislation – Modern legislation remains advanced through continuous improvement, allowing practitioners access to the most comprehensive range of products when offering client solutions. Company law permits limited partnerships, PCCs, ICCs – which, according to local lawyers, are becoming increasingly popular in the wealth management sphere – and the amalgamation and migration of companies.

Conveniently located – The Island’s location between Europe and the UK places it in a time zone between the US and the Far East. This makes Guernsey a convenient place to carry out business with many different countries. Travelling to the Island is also quick and easy as there are frequent air and sea links to both Europe and the UK, with a flight time from London taking less than an hour.

A ‘one day business solution’ – Guernsey has a broad-based financial services industry (including support services) and all of the Island’s businesses and key institutions are in close proximity to each other so an extensive array and high volume of business can be carried out face-to-face and in a short amount of time.

Highly developed business support infrastructure – Carrying out business in Guernsey is quick and easy because the Island has a high quality infrastructure, including a newly upgraded first class telecommunications network that is unsurpassed offshore.

Special relationship with the EU – Businesses based on the Island have the advantages of being in a jurisdiction that is within the Common Customs Area and Common External Tariff without all the implications of operating from a full member of the EU. For example, directives such as those on fiscal harmonisation, financial services and company law do not have effect in Guernsey.

Stability – Continuity within Guernsey’s democratic government offers political and economic stability and thereby a safe and secure environment on which business can rely.

Independence – Legislative and fiscal independence allows the Island to respond quickly to the needs of business.

For more information about Guernsey's finance industry please visit www.guernseyfinance.com.

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