Originally published in New European Economy Magazine,
Chris Bound, Senior Partner and Aimee Curzon, Associate
at Collas Day review Guernsey's strengths as a leading
international finance centre.
Throughout the financial crises of 2008 and 2009, Guernsey has
remained a competitive jurisdiction in which to do business. With a
politically stable environment, being legislatively and fiscally
independent, Guernsey boasts a thriving financial industry, and
many tax advantages. This will continue despite challenges to the
Zero-Ten basis of taxation.
Banks, insurance companies, fund managers and administrators and
fiduciary businesses are regulated by the Guernsey Financial
Services Commission (GFSC), in accordance with international
standards, providing comfort to investors.
Guernsey has a strong reputation in the funds market, with funds
sponsored and promoted by leading institutions in over 38
countries, key attractions being taxation and flexibility of
Along with the traditional structures such as companies, unit
trusts and limited partnerships, Guernsey's companies law
facilitates the incorporation of both incorporated cell (ICC) and
protected cell companies (PCC). A PCC is a single legal entity,
with distinct cells which can have their own assets and
liabilities. An ICC is similar, albeit that each cell is a separate
legal entity. The investor therefore has a greater choice of
vehicle in which to invest.
The Companies (Guernsey) Law 2008, which came into force on 1
July 2008, consolidates all companies laws in Guernsey. It has
proved to be a very user-friendly piece of legislation, simplifying
and consolidating many corporate processes. Forming a company is no
longer a judicial process, and GFSC sanction is only required for
the formation of ICCs and PCCs.
Guernsey companies need only have one shareholder and a minimum
of one director. There is no longer the requirement for a company
secretary (though in the absence of one, a director must perform
such duties). It is also not necessary for a company to make its
accounts available to the public.
A popular feature of company law in Guernsey is the ability for
a company to be registered in another jurisdiction and to be
re-registered as a Guernsey company (migration). There have been
many companies de-registering from their original jurisdictions and
migrating into Guernsey to take advantage of the many benefits
In conjunction with the new law, an online companies registry
was established. A welcome modernisation of corporate processes in
Guernsey, this allows for quick and easy paperless company
searches, ordering of documents and the uploading of company
documents. The register also facilitates company formations, on a
24 hour, 2 hour or rapid 15 minute basis.
Perhaps the benefit Guernsey is best known for is its tax
advantages. There are no capital gains, inheritance or value added
taxes, and personal income is taxed at the rate of 20%. On 1
January 2008, a new corporate tax regime, known as Zero-Ten, was
introduced (although this regime is due to be reviewed). Under
this, excepting several circumstances, companies pay a standard
rate of 0% on profits. This is likely to move to a basic 10% rate
with Guernsey funds continuing to be tax exempt. In addition, there
is no stamp duty payable on the transfer of shares. Guernsey also
has a healthy trust and fiduciary market, aided by the well-written
Trusts (Guernsey) Law 2008. There is a significant level of
international pension business, and employment schemes.
All sectors are well regulated, and recent years have seen the
introduction of heightened due diligence.
Such features in addition to enhanced choice, political
stability, and its geographical location and connections with the
UK, make Guernsey an ideal and superior offshore jurisdiction in
which to do business.
Many people are baffled by trusts, the purpose of which they don't fully comprehend. Some even regard them with suspicion, as tools of of opaque tax evasion strategies of a type favoured by wealthy individuals.
We were recently instructed by a Bank in relation to a regulatory matter. The Bank had made a suspicious activity report to the Financial Investigation Unit ("FIU") due to their concerns about the potential source of funds in an account.
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