Guernsey Finance's Fiona Le Poidevin on why Guernsey wealth structures are a perfect fit for Asian investors.
Asian investors have increasingly set their sights on investments overseas in recent years, aiming in particular to acquire and hold international residential and commercial properties. Guernsey's finance industry, established for over 50 years, has built up considerable expertise working with foreign investors in this area.
The past decade has seen a number of Guernsey wealth-management and real-estate-acquisition structures established to facilitate investments, as individuals and their families seek to place assets in reputable jurisdictions that are well regulated and conveniently located, and that offer experienced, knowledgeable service providers.
Property, especially in London, is perhaps the most attractive, which means Guernsey – sitting between the UK and France – offers an additional geographical advantage for anyone exploring European real estate prospects. For wealthy foreign investors, the issue of direct ownership of real estate assets has to be considered in terms of unforeseen tax implications – e.g. property taxes, stamp duty and inheritance tax. In Guernsey, the structures primarily used to hold real estate and address these matters are companies, limited partnerships, private trusts, limited liability partnerships and unit trusts such as the Guernsey property unit trust. It is also possible to utilise a Guernsey incorporated real estate investment trust.
Aside from international property investment, wealthy Asian individuals and their families often seek a family office service from their wealth managers. This can involve help with aspects of running the business empire, handling the family's property and liquid wealth, attending to the needs of individual family members, philanthropy coordination and succession planning.
Guernsey's finance industry has such depth and breadth that it is well placed to provide the widest scope of family office services – at a high quality. This is particularly the case as the island continues to develop its world-leading investment fund and private equity sectors, the success of which is due in part to the wide variety of robust tax-neutral structures available under local legislation, which can be used to hold assets and investments of all types. There are also major international providers based in Guernsey fulfilling the important custodian role. Therefore, there are options to invest in existing Guernsey platforms, as well as to establish a new or bespoke investment platform for larger private clients or family offices.
We recognise that many Asian investors, particularly in China, had previously equated offshore jurisdictions with the British Virgin Islands and the Cayman Islands, but this has recently started to change, with clients and advisors beginning to understand that offshore jurisdictions extend beyond the Caribbean. They recognise not only that there are other international finance centres, but that these can offer a very different, and often better, proposition.
For example, Guernsey is recognised by international organisations as meeting robust standards in terms of regulation and tax transparency – attributes with added significance following the global financial crisis. In addition, our understanding is that, while the initial, upfront costs of doing business in the Caribbean may be lower, the expense is broadly comparable in the long term. Guernsey's wealth-management sector is made up of 150 lead corporate licensees, ranging from local, boutique providers to large, multinational organisations. The island is renowned for being dynamic and forward-thinking – qualities demonstrated by Guernsey developing a regional stock exchange, pioneering the cell company concept and introducing the world's first image rights legislation and register.
A growing number of Guernsey-based firms have also developed their own presence in Asia in recent years. Law firm Ogier has offices in Hong Kong and Shanghai, Mourant Ozannes is now established in Hong Kong, and Collas Crill has an operation in Singapore. Louvre also has an office in Singapore and, like fellow wealth-management firms Nerine and Newhaven, an office in Hong Kong. Another private-client specialist, Richmond Fiduciary Group, has opened an office in Shanghai. In addition, fund administrator International Administration Group has established joint ventures in both Hong Kong and Singapore with the Tricor Group, a member of the Bank of East Asia Group.
Perhaps not surprisingly, given the number of Guernsey-based firms establishing a presence in mainland Asia, figures from the Guernsey Financial Services Commission show that wealthy individuals and families from the region are becoming an increasingly important market for Guernsey's wealth-management community.
An original version of this article appeared in STEP Journal, October 2014.
For more information about Guernsey's finance industry please visit www.guernseyfinance.com.
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