Originally published in Hedgeweek Guide to Relocation, December 2011
No matter whether fund managers are considering relocating personally and/or corporately, there are few better options than Guernsey.
The Island's coastline of cliffs, beaches and harbour ports combines with its French influence to provide a relaxed lifestyle in a temperate climate and where there is also a thriving international finance centre, including a leading investment funds industry.
Lifestyle - Guernsey combines many of the reassuring elements of UK culture with the benefits of living abroad. For example, the Island is English speaking, uses the British pound Sterling and is in the same time zone as the UK but enjoys a more temperate climate similar to Northern France. In addition, there are short journey times for on-Island commuting, a good range of cafes, bars, restaurants and shops and a host of recreational opportunities ranging from yachting and water activities to sport and music.
Integration - Moving to Guernsey is made easy by the potential for seamless integration into the local community, where there is no distinct divide between the native population and new arrivals.
Tax - The standard rate of personal income tax is 20%, social security is levied at 6% on salaries up to £105,144 (from January 2012) with personal allowances of £9,200 (from January 2012). In addition, individuals/married couples can take advantage of various tax capping arrangements. Guernsey is particularly attractive because there are no capital taxes, no wealth taxes, no gift taxes, no inheritance taxes and no indirect sales taxes.
Education - Guernsey provides an extremely high quality level of schooling. There is no shortage of places, UK curriculum and examinations are followed and results are impressive. Many continue their studies at UK universities, although further courses and qualifications are also increasingly available on-Island.
Housing - There are no restrictions on purchasing property but there are on occupation – any EU national can take up residence in an open market property; local market properties are available to those qualifying by birth/period of residency or moving to the Island as a designated key worker.
Financial services infrastructure - Guernsey plays host to a finance industry with unique breadth and depth, including a leading investment funds industry with particular specialisation in servicing alternatives, such as private equity, property and hedge funds/funds of hedge funds as well as other niche asset classes. These providers are supported by expert lawyers and accountants, a dynamic stock exchange, world class telecommunications and a robust yet pragmatic regulator.
Reputation - Over the last five decades the Island has established a reputation as a leading international finance centre providing a wide range of products and services to a global client base at the very highest standards. Guernsey has been commended by the IMF for its standards of regulation and was among the first to be placed on the OECD 'white list', as well as being commended by the OECD Global Forum for its commitment to tax transparency and exchange of information.
Tax - Guernsey is reviewing its system of corporate taxation but is committed to maintaining an internationally compliant and competitive regime, including maintaining an exempt regime for collective investment schemes and certain associated entities. Currently in place is 'Zero-10', where all companies are taxed at 0% except for banks who are liable at 10% on certain activities. There is no withholding tax on dividends paid, no capital gains tax and no indirect sales tax. Employers pay Social Insurance on payroll capped at a rate of 6.5% on a maximum salary of £125,268 per employee (from January 2012).
Travel links - Guernsey's links to the UK (both London and the wider regions) and continental Europe mean that travelling for business or to visit family and friends is quick and simple. For example, the actual flight time to and from London is usually 45 minutes, enabling day trips in either direction.
Guernsey has already attracted some high profile individuals and firms from the funds world and we believe that the blend of Island life and a leading international finance centre provides the ideal combination for you and/or your business. Visit www.liveguernsey.com to find out more about improving your work/life balance.
Guernsey: In Brief
- Situated in Europe between the UK and France
- Area: 24 square miles (62km2); population: 60,000
- A British Crown Dependency
- A special relationship with the EU]
- English speaking
- Currency: British pound Sterling (GBP)
- Same time zone as the UK
- Transport links to both UK and Europe
Personal Tax Cap – Explained
A tax cap is available which applies equally to individuals or married couples and limits their income tax liability in any fiscal year. The cap for non-Guernsey sourced income is £110,000 and for Guernsey sourced income it is £220,000. The overall cap for an individual (or married couple) is £220,000, regardless of source of income. Therefore, if an individual or married couple has income over £1 million (both Guernsey and non-Guernsey sourced) then, with a flat rate of 20%, the tax cap would apply and their Guernsey tax liability would be limited to £220,000. Any income in excess of the £1 million would not be taxed. If all income was non-Guernsey sourced then the maximum tax payable would be £110,000. (All figures apply from January 2012)
Guernsey As A Finance Centre: Quick Facts
- 37 licensed banks with more than £114 billion worth of deposits
- Investment funds business valued at more than £270 billion
- An investment management and stockbroking sector with more than £85 billion of assets
- More than 150 fiduciaries holding more than £350 billion of assets in trusts and companies
- World leader for Qualifying Recognised Overseas Pension Schemes (QROPS)
- The No. 1 captive insurance domicile in Europe; fourth in the world
(Re)locating to Guernsey
The most high profile fund manager to relocate to Guernsey is Guy Hands, Chairman of Terra Firma. His firm had also established a significant operation in the Island, alongside fellow private equity houses such as EQT and Permira. Another significant player in the private equity industry, Jon Moulton, Chairman of Better Capital, has bought a house in Guernsey and his investment company is domiciled and administered in the Island.
Bluecrest Capital, the third largest hedge fund manager in Europe, relocated its headquarters from London to Guernsey in 2010 and shortly afterwards investment manager and stockbroker Shore Capital followed suit when its Group Managing Director, Graham Shore, moved to the Island. He has also been joined by Stephen Lansdown, co-founder of financial services firm Hargreaves Lansdown and now Owner/Chairman of Bristol City Football Club.
Guernsey has also attracted world renowned names such as JP Morgan, Bank of New York Mellon, Capita and Citco to establish fund administration operations in the Island during recent years and they have been joined by other boutique fund servicing names including Alter Domus and Custom House who have a particular specialism in the private equity sphere.
For more information about Guernsey's finance industry please visit www.guernseyfinance.com.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.