Zero Tax
in Guernsey
March 2009
collas day commercial
Taxation of distributions
While companies are taxed at a rate of
0%, it is the responsibility of companies
to deduct tax from distributions of profits
(as opposed to capital) made to their
shareholders. How these are taxed is
dependent upon a shareholder’s place of
residence. If the shareholder is an individual
resident in Guernsey, a 20% rate is charged.
If the shareholder is a company, the
company standard rate of 0% applies. If the
shareholder is non-Guernsey resident, no
Guernsey income tax is payable or withheld.
It is the responsibility of the company to
either collect and pay the tax charged or,
where a shareholder is non-Guernsey
resident, the burden is on the company to
obtain evidence that a shareholder is not
Guernsey resident before it makes a payment
without deducting tax.
Taxation of distributions
Certain events will trigger a deemed
distribution (in respect of which a liability to
tax will arise for a shareholder), namely:
a shareholder’s death;
a disposal, repurchase or redemption
of shares;
a shareholder changing residency;
the migration of the company out
of Guernsey;
the liquidation of a company;
the amalgamation of a company with
another company; and
investment income will be deemed to be
distributed at the end of each quarter.
introduction
A new corporate tax regime was introduced
in Guernsey on 1 January 2008, known as
the “Zero-Ten regime”. It also signalled the
abolition of two further regimes, those for
exempt companies (which currently pay a
£600 annual exempt fee) and international
business companies – other than in respect
of collective investment schemes, which
still have the option to apply for exempt
company status.
Tax rates on company profits
All companies now pay a standard rate of 0%
income tax on profits. Certain companies pay
higher rates as follows:
a rate of 10% is charged on the profits
from specified banking activities;
a rate of 20% is charged on the profits
from act