Laila Arstall, an Advocate at Carey Olsen in Guernsey looks at
the tax treatment of income from image rights.
The principal form of direct taxation in Guernsey is income
The receipt of fees from licensing the use of image rights to
third parties is deemed to be "income from other
sources". Where the recipient is resident in Guernsey for tax
purposes, the income is taxable after the deduction of relevant
expenditure, at the individual standard rate, currently 20 per
cent, in the hands of a resident individual or at the company
standard rate, currently zero per cent, in the hands of a resident
company. A company is resident in Guernsey for tax purposes if it
is incorporated or controlled in Guernsey and has not been granted
exempt status. Exempt status is usually conferred on entities
operating as part of a collective investment scheme.
To the extent a payment in relation to an image right arises or
accrues from a source in Guernsey, ie, is paid by a resident of
Guernsey to a non-resident individual or company, the income from
the image right would not give rise to any further income tax
charge in Guernsey.
This is so unless the non-resident recipient carries on business
in Guernsey through a permanent establishment in Guernsey and the
payment is to be taken into account in computing the profits
chargeable to tax in Guernsey as income derived from that business.
This means that for most structures Guernsey tax on the payment of
such income to non-residents would not be payable, whether by
direct charge or by way of withholding. Such income in the hands of
a non-resident recipient will be deemed 'disregarded
income' for Guernsey tax purposes.
Guernsey does not levy VAT or equivalent indirect tax in respect
of sales. There are no taxes upon capital inheritances, capital
gains, gifts, sales or turnover (unless the varying of investments
and the turning of such investments to account is a business or
part of a business), nor are there any estate duties (save for
registration fees and ad valorem duty for a Guernsey Grant
of Representation where the deceased dies leaving assets in
Guernsey which require presentation of such a Grant). Stamp duty is
not chargeable in Guernsey on the issue, transfer or redemption of
shares in a company.
Guernsey can offer a number of investment holding and operating
structures ranging from:
Protected Cell Companies
Incorporated Cell Companies
Collective Investment Schemes
In this way, Guernsey's legal framework and tax neutrality
facilitate the holding and management of image rights through a
range of vehicles to meet the requirements of wealth management and
As reported in the market updates section of this newsletter, the UAE Ministry of Economy recently reviewed the fees charged by its various departments, including the Trade Mark, Patent and Copyright Office.
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