Tax Facts - Guernsey

A Taxing Question - Why Use Guernsey?

ExpatMoneyChannel identifies the tax implications of using Guernsey as a base for your savings and investments.

Like many offshore financial centres, Guernsey benefits from a low tax regime. There is no capital gains tax, wealth tax, stamp duty, death duty or inheritance tax, all of which allows your savings to grow on the island without the deduction of taxes. This doesn’t mean you are exempt from paying tax on your savings and investments in your current country of residence, it simply means there are no Guernsey taxes applicable. For example, if you are an expat in a European Union country, you are required to pay certain taxes on your savings wherever they are held, as part of the EU Savings Directive.

So if you have savings in Guernsey and reside in an EU country as from July 2011 you will soon have the option to have a Retention Tax automatically deducted at source from interest earned on savings at a rate of 35%, or opt for disclosure of interest payments and not have Retention Tax applied. If you do not reside in an EU country then the EU savings directive does not apply to you. In addition, taxes such as death duties or inheritance taxes may well be bound by your domicile, rather than residence.

But for expats juggling with at least two tax regimes initially, possibly more if you have to move for employment purposes, placing your savings and investments in a reputable offshore centre not only gives you the potential to grow your savings in a largely tax free environment, it also gives you the flexibility of having all your savings and investments in one place. For many expats this is a much better option than having lots of little savings and pension pots in different countries suffering a wide variety of different tax regimes and potential access problems