Among the reasons for Guernsey's continuing popularity as a location for captives is that the application process is uncomplicated and initial approval can be obtained speedily, if necessary. In addition, the costs of setting up are reasonable - typically about £2,650 ($4,240) including an application fee of £1,650 ($2,640).

Applicants are required to give full details of ownership and submit a business plan disclosing classes and sources of business, including insurance and reinsurance programmes. Each captive must have a minimum share capital of £100,000 ($160,000) and at least five directors including two Guernsey residents.

The Director of Insurance requires that minimum margins of solvency are maintained viz. 18% of the first £5 million ($8m) of net premium income in respect of general business; 16% of the excess above £5m. In addition, at least 75% of assets must comply with the Commission's list of approved assets. However, while minimum solvency requirements must be met, the Director takes a risk-based approach with all captive applications and assesses each company on its own merits.

For long term business the minimum solvency requirement is £50,000 ($80,000) or 2.5% of the value of the long term fund and at least 25 % of its assets must be approved.

Every financial year captives must provide the Commission with audited financial statements; a margin of solvency calculation; a certificate from the General Representative giving obligatory declarations; a new business plan; and supplementary accounting information.

Summarised the basic costs involved are: application fee £1,650 ($2,640); annual fee £1,650 ($2,640); filing fee £100 ($160). Document Duty is set at £50 ($80) for a company with an authorised share capital of up to £10,000 ($16,000). Above this the duty is payable at 0.5% of the share capital subject to a maximum of £5,000 ($8,000). A choice of tax is available, no tax (in lieu of a fixed annual fee of £500 ($800); a sliding scale from above zero to 30%; or 20% on net profits. There are no other taxes that apply.

The content of this article is intended to provide a general guide to the subject matter. Specialist advise should be sought about your specific circumstances.

For further information contact Peter Crook on Tel: +44 (0) 1481 712706 or visit the Guernsey Financial Services Commission Web Site at:

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