Guernsey is the leading European offshore for launching an international business

Registering a company in Guernsey gives you the opportunity to run an efficient and legitimate business in a European tax-free zone. The main advantage of the jurisdiction is a developed and stable financial system closely linked to the UK. Guernsey is an offshore, the tax burden on legal entities and individuals is minimised.

Guernsey’s legislation is focused on asset protection, interaction between the corporate segment and state regulatory structures is based on mutual interests. Controls are strict but flexible, adapting to the current situation. Financial services in Guernsey are diverse, with the greatest demand for fund management, asset protection and diversification, and wealth planning. Special mention should be made of political, economic and financial stability, which makes the island jurisdiction a good choice when launching a promising business.

Guernsey’s business profile:

• official languages – English, French;
• time zone – GMT, in summer – UTC+1;
• political system – Crown Estate of Great Britain;
• currency – Guernsey pound (GGP), USD/GGP exchange rate – 1.35:1, pegged to the British pound sterling;
• main economic spheres – agriculture, animal husbandry, fishing, financial services, company registration, tourism.

Advantages of Guernsey for investing and doing business

Offshore zones have traditionally been used for cross-border commercial transactions and legitimate tax optimisation. Given that Guernsey taxes are really very low (in many cases – virtually zero), this format is quite possible. The jurisdiction has virtually no strong competitors, as the number of tax-free zones in Europe is limited, most of the available alternatives are midshoring.

The Guernsey jurisdiction is an exception to the rule. There are very good conditions for doing business here, but the choice is not limited to commercial operations only. Guernsey’s well-developed banking system encourages the launch of projects focused on providing a variety of financial services. Typical options are asset management, implementation of complex investment schemes, insurance services, creation of trust and fund structures. We would like to make a special mention of Guernsey fintech. Startups working in this area expect to enter the rapidly developing global market of digital financial services.

Corporate advantages of registering a company in Guernsey:

• low or zero taxation;
• no certain basic taxes – corporate income, capital gains, inheritance, transfer of property, VAT, stamp duty;
• Guernsey company incorporation is very quick;
• business-friendly corporate regulations;
• a wide range of available legal forms;
• no requirements for authorised capital;
• business in Guernsey for foreigners is not associated with any restrictions due to their non-resident status;
• the possibility of merging companies is provided for;
• stability of the national currency (largely due to its rigid peg to GBP);
• simplified removal of the company from the register.

General advantages of company registration in Guernsey:

• Developed financial services sector;
• modern infrastructure;
• good reputation of companies registered in Guernsey;
• international stock exchange (Channel Islands Stock Exchange);
• favourable location (close to the UK and mainland Europe);
• London time zone.

All these factors make investment in Guernsey favourable, promising and low risk. The authorities of the jurisdiction maintain a very high reputational status, targeting business people with a wide range of needs. One of the typical manifestations of such an approach is the possibility to open a bank account in Guernsey for non-resident legal entities. This option is gradually disappearing from the global business space due to the increasing trends of transparency and de-offshorisation.

Another proof of a balanced approach to regulation is investment in Guernsey, if the highest possible confidentiality is prioritised. Previously, structures in classic offshore jurisdictions (Caribbean, Asia, Middle East) were used for this purpose. But there is an alternative solution – to open a business in Guernsey with nominal service and extended administration capabilities.

Who will be primarily interested in the advantages of Guernsey offshore:

• Wealthy individuals and large businessmen who need effective tools for asset protection and diversification;
• business project founders who need to register a European company offshore;
• anyone who wants to take advantage of legal tax incentives;
• business owners who are critical to currency fluctuations in the country of incorporation;
• business people who want to start a business as quickly as possible without having to deposit authorised capital;
• foreigners (non-residents) who are ready to invest in the Guernsey economy, but do not want to disclose their participation in such commercial projects;
• businessmen who rely on stability and predictability (due to Guernsey offshore’s compliance with FATCA and OECD requirements);
• founders of any financial digital services aimed at the consumer or corporate market.

Personal taxation

Legislation in force in Guernsey does not formally give grounds for the jurisdiction to be granted offshore status. But de facto, subject to exemptions and deductions, the situation changes. Guernsey personal income tax is formally levied at a rate of 20%. This is significantly lower than the EU (37.9 per cent), euro zone (41.8 per cent) or US (37 per cent) average.

Guernsey’s actual personal taxes depend on the residence status of the payer:

• Principally Resident (Principally Resident). Status is attributed if the person is physically present in Guernsey for…
• 182+ days during the tax year in question;
• 91+ days per year during the tax year provided that the taxpayer has spent a total of 730+ days in Guernsey in the 4 previous years;
• Exceptional Resident (Solely Resident). This status is awarded if a person is physically present in Guernsey for…
• 91+ days during the tax year in question;
• 35+ days per year during the tax year (but no more than 91+ days in any other jurisdiction) provided that the taxpayer has spent a total of 365+ days in Guernsey in the 4 previous years;
• Resident Only (Resident Only). The taxpayer’s status applies solely in a particular tax year, such persons have spent at least 91 days in another jurisdiction.

Rules for calculating tax liability depending on the type of residency status:

• Principal Residents and Exclusive Residents. Include in the taxable base only that part of income derived outside Guernsey.
• Residents only. Can choose whether to include worldwide or domestic income earned in Guernsey in their tax base. For persons in the “residents only” category, instead of the standard system for calculating tax liability, an alternative scheme is available with the payment of a fixed fee -£ 40 thousand (until 2021 -£ 30 thousand). The regime applies to foreign income only.
• The taxable base for all categories of taxpayers is calculated at 20% of net income (after deductions).
• Tax residents of Guernsey can choose to limit their personal tax liability. The limit depends on the family status of the taxpayer, the taxation scheme (domestic or worldwide income) and a number of other conditions.
• The annual limit on non-taxable income for a lump sum payment for contributory pension schemes is£

Business taxation

Guernsey corporation tax is formally provided for in legislation. Resident companies must account for worldwide income, non-resident companies only for income earned in the jurisdiction. The subtleties are that the Guernsey corporate tax rate is set at 0% in most cases, which de facto (but not de jure) means offshore status. For some areas of business there are higher rates of 10% and 20%.

Criteria for Guernsey tax resident status (effective from 2019, meeting any condition is sufficient):

• Controlled from Guernsey;
• centrally managed from Guernsey;
• the company is incorporated in Guernsey and does not have exempt status.

Possible exceptions where a company is granted exempt status despite meeting the formal criteria are:

• the company is a tax resident of another jurisdiction (needs to be documented);
• the company is centrally controlled and managed from another jurisdiction + either of the two conditions is met:
• the company is considered a tax resident of another jurisdiction on the basis of an existing bilateral double tax treaty;
• the maximum corporate income tax rate in that jurisdiction is not lower than 10%.

An important condition for the application of the exemption is the conduct of real business. A company that claims the exemption must prove that its tax residency status in the other country cannot be explained solely by a desire to defer payments or reduce the tax base (both for the company itself and for any individual).

Other Guernsey corporate taxes:

• Income from land and buildings – 20 per cent;
• Guernsey VAT – none;
• on the transfer of property – none;
• Guernsey capital gains tax – none;
• stamp duty – none;
• social security contributions – 7 per cent (7.4 per cent for employee), applicable from 2025;
• withholding tax – none.

It should be noted that Guernsey has no currency control and does not apply CFC rules. Therefore, a business registered in the jurisdiction will not face the typical problems of midshoring and onshore countries. Taxation of companies in Guernsey is gradually transforming in line with the requirements of the times. But the authorities have chosen a soft format of introducing innovations, refusing to tighten fiscal policy. This is an important advantage of Guernsey offshore, which favourably distinguishes it from other tax-free jurisdictions.

Peculiarities of corporate law

The combination of offshore status and location in Europe creates very favourable conditions for launching a business. Guernsey does not have many direct competitors, especially given the well thought-out and optimised legislation. It strikes a compromise between respecting anti-cleansing tendencies and preserving freedom for companies. While Guernsey wins over pure offshore companies in respectability, Guernsey is not inferior to them in terms of business conditions.

The most significant features for registering and doing business:

State fees (additional fees are possible):

Peculiarities of company registration in Guernsey

Starting a new business in the jurisdiction involves a number of features that are not obvious at first glance. Guernsey’s zero personal income tax, favourable fiscal legislation, high level of confidentiality – the positive impact of all these factors can be offset if mistakes are made during registration or at the preparation stage. What do I need to pay special attention to?

Available organisational and legal forms of companies:

• Limited Liability Company (Limited Liability Company).
• Private company with liability limited by guarantee (Guarantee Company).
• Unlimited Liability Company.
• Mixed Liability Company.
• Segregated Portfolio Company / Protected Cell Company (PCC, Protected Cell Company).
• Incorporated Cell Company (ICC, Incorporated Cell Company).

Guernsey’s corporate law is flexible and adapted to the realities of today’s digital economy, so there should be no legal difficulties in starting a business. Some requirements are standard for almost any developed jurisdiction. Typical examples include restrictions on the choice of company name, mandatory registered office, and the timing of the first shareholders’ and board of directors’ meeting.

Many regulations are specific to tax-free jurisdictions. They relate to the absence of requirements for real economic presence (substance), keeping accounting records exclusively in Guernsey. The identity of the beneficiary must be disclosed to the registrar, but information on a particular person is not publicly available.

Examples of Guernsey-only corporate rules:

• Private and public companies are not distinguished;
• transformation from ordinary status to a company with separate cells (ICC,) and vice versa is permitted;
• it is possible to change the liability status from limited to mixed and vice versa.

Before you start preparing for company incorporation, you need to understand the rules under which a Guernsey business operates. Only in this case business people will work in the most favourable and friendly environment, actively using all the advantages of Guernsey offshore.

Classification of companies in Guernsey:

• Large (audit is mandatory for them). Net turnover of at least£5m, balance sheet from £3.26m, at least 50 employees.
• Small (exemption from audit is possible). Confirmed dormant company status, no more than 10 employees.

Information on the legal entity that will be in the public domain after incorporation:

• Memorandum of Association and Articles of Association;
• certificate of incorporation;
• information contained in the company’s annual reports;
• all resolutions filed;
• all amendments relating to directors and resident agents;
• details of the company’s registered office in Guernsey;
• the status of the company (operating, closed, in liquidation).

Operational flexibility

The Guernsey offshore zone provides for a good business environment. As in other tax-free jurisdictions, it is advantageous to register a company here for cross-border trading between the UK, Europe and North America. But some of the opportunities available to investors and business people are very rare offshore, especially given the jurisdiction’s status and close links with European and UK businesses.

A typical example is fund management in Guernsey. Thanks to well-developed legislation, a well-developed banking sector and strict information protection rules, such projects can be launched with minimal administrative and legal hassle. Another area attracting the business community is the registration of a trust in Guernsey. Generally – specialised services related to asset protection and diversification. Given that a nominee director is allowed in Guernsey, this option becomes particularly attractive.

But you need to understand that any tax irregularities (aggressive optimisation, dilution of the tax base, forced transfer of profits, etc.) will be unworkable. Guernsey Financial Centre Guernsey is a solid, law abiding jurisdiction. Its formal offshore status can be misleading, and that would be a big mistake. Guernsey’s tax residency encourages legal, transparent business, but only if anti-money laundering laws are fully complied with.

What factors contribute to the operational flexibility of a business in Guernsey:

• full compliance with KYC / AML regulations precludes any claims against the jurisdiction by international financial regulators;
• transparent nominee service to the registrar;
• Guernsey’s bank secrecy removes potential problems with corporate and personal accounts (the risk of them being frozen or blocked is very low);
• the rigid peg to the pound sterling makes any financial services in Guernsey predictable and reliable, creating a strong foundation for cross-border cash flows;
• double taxation treaties with major trading partners reduce the risks associated with increased fiscal obligations;
• Guernsey’s economic stability makes it possible to realise projects with a long payback period where immediate profitability is not an objective;
• Guernsey has fully supported the international community’s efforts to combat tax base erosion, these are enshrined in the MLI BEPS multilateral convention, in the jurisdiction it came into force on 1 June 2019;
• Guernsey participates in the CRS MCAA automatic exchange of financial account information, practical implementation commenced in autumn 2017;
• Guernsey’s flexible legislation takes into account the provisions of the CARF-MCAA international convention governing the automatic exchange of data on cryptocurrency assets (signed on 26 November 2024);
• Guernsey is an AML / CTF compliant offshore, it is not blacklisted or greylisted by the FATF, so the risk of problems with correspondent dollar accounts is very low;
• the Guernsey government is focusing on diversifying the economy by incentivising the financial services sector, offshore business and cryptocurrencies.

Citizenship for investment

The jurisdiction’s legislation does not provide for the possibility of obtaining a second passport for investments in the economy or property. Guernsey’s investment programmes are very similar to the UK’s, so on a technicality, many Caribbean tax-free zones may seem like a preferable option. But is this really the case?

If you prioritise stability and predictability, the benefits of offshore Guernsey are not made any less significant by the fact that you can’t get a second passport quickly. CBI (Citizenship By Investment) programmes in almost all countries where they operate have often been criticised in recent years due to the high risk of financial and tax abuse.

Guernsey immigration law, which has much in common with British immigration law, provides the option of obtaining a Residence Permit, which can be transformed over time into Permanent Residency and citizenship. The waiting period is relatively long. But obtaining a Guernsey passport through the traditional routes is much longer and their applicability is limited.

Conditions for participation in the Guernsey residence permit through investmentprogramme :

• minimum from€ 200 thousand;
• investor visa is issued for 2 years, at the end of its validity it can be extended for another 3 years;
• obtaining permanent residence permit after 5 years of living in Guernsey in the status of residence permit;
• you can apply for citizenship after 1 more year.

Basic requirements for applicants:

• age of the main applicant – from 18 years;
• clean record with the police;
• good reputation;
• sufficient financial reserves (for investing and living in Guernsey) must be documented;
• purchase or long-term lease of a property in Guernsey;
• successful passing of an English language proficiency test.

Conclusion

Zero corporate tax in Guernsey is an important, but not the only advantage when choosing a jurisdiction for company registration. The most significant argument “in favour” is a very rare combination of several factors in real life: location in Europe, the status of a “clean” offshore, close ties with the UK and strong asset protection.

The Guernsey jurisdiction has a very high reputation in the global business community, with a developed financial services sector and an expanding range of blockchain-based digital services. There is a very good level of confidentiality here, which is increasingly rare in Europe. Guernsey residency can be obtained through one of the investment routes. Holders of a residence permit have the right to apply for permanent residence and citizenship over time.

A direct comparison of offshore – Guernsey vs Jersey – is not quite correct, each jurisdiction has its own advantages. Therefore, if you are interested in a European offshore, the choice between them requires an in-depth analysis with an assessment of applicability to the specific features of the case.

The registration procedure is very fast (if all the necessary documents are prepared). Such legal entities can easily open a corporate bank account, and their founders can get access to a wide range of financial services and investment programmes. Launching commercial projects in Guernsey involves minimal long-term risks, so this option is chosen when stability and predictability are more important than profit.

Imperial & Legal will be pleased to assist you in company registration in Guernsey. We will prepare a customised turnkey solution for you, take care of all the legal hassles of starting a new business in Guernsey and offer additional services (bank account, visa support, accounting services, etc.) that are most suitable for your specific situation.