What are the tax laws on Guernsey?
Although it’s sometimes dubbed the ‘Monaco du nord’, Guernsey’s beneficial financial climate isn’t quite the same as that of the Principality: you pay tax but at a lower rate. Unlike Jersey, there are no entry requirements. Your tax treatment is determined by your residency status, which, in turn, is set by the number of ‘midnights’ you spend on the island.
You can fall into one of three categories: solely resident, resident only and principally resident, but if you spend fewer than 91 days on the island in one year, you’re not considered resident at all.
Guernsey tax law allows a resident only individual to elect to pay a flat rate of annual tax of £27,500 and a relatively recent draw for high-networth individuals resident on the island is that they can take advantage of a tax cap: on tax arising on non-Guernsey source income, it currently stands at £110,000 and the cap on tax on worldwide income is currently £220,000. Many relocation experts based on the island warn that it’s important to be vigilant about cutting ties with the UK if a person intends to move to Guernsey: HMRC has been known to have its curiosity piqued should golf-club memberships be maintained on the mainland.
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Buying a house on Guernsey – open market and local market
Although there are no restrictions on owning property in Guernsey, there are restrictions on occupation under a system of Open and Local Markets. Local Market properties in general can be occupied by people who were born in Guernsey or those who, although not born in Guernsey, have lived on the island for a number of years. The rules concerning who’s a ‘qualified resident’ are very complicated and, in any case where there’s doubt, Guernsey’s Housing Department should be consulted for advice. Open Market properties can be occupied by local or non-local residents.
There are approximately 1,600 Open Market properties on the island. Generally, they’re occupied by ‘non-locals’, as they tend to be more expensive than Local Market houses-as a rule of thumb, by about 30%. Anybody resident in an Open Market property can work on the island without the necessity of a local licence to do so.
The process for buying property on the island is, however, one thing that can feel distinctly foreign; title deeds are sometimes in French. The whole procedure, from instructing your advocate to completion, takes about a month on average, although contracts can be passed more quickly in urgent cases.
Completion itself takes place in a conveyancing court before a Jurat of the Royal Court and both purchaser and vendor must attend in person or by power of attorney
Why is Guernsey best for business
Country Life talks to Jon Moulton from Better Capital about doing business on Guernsey
‘The island is a great place to do business. Not only because of the beneficial tax laws (there is no corporation tax, there is no VAT and Income Tax is 20%), but because there is less red tape, which means there are fewer forms to fill in. Not that the island is a free-market desert island, but it can be easier to get things done.
In fact, we have a very high standard of integrity, shaped by a strong Institute of Directors and a great Chamber of Commerce; the banks work well and it’s relatively easy to get direct access to government. The Minister for Commerce and Employment is extremely keen to support new business ventures on the island: this could be anything from a coffee shop to a multimillion- pound hedge fund. The talent pool of people is extremely good, although with 1.5% unemployment, it can be tough to source the manpower you want and there is competition for key people.
One big difference over here from the mainland UK is that the government is made up of independent members who are all locally elected, which means party politics doesn’t get in the way of decision-making based on what’s best for the island and its future.’ Jon Moulton, Better Capital (www.bettercapital.co.uk).
** Image from www.visitguernsey.com