Guide to Guernsey Financial Services

Fact File - Your Guide to Guernsey

Where is it?

Guernsey covers approximately 24 square miles and is located in the Gulf of St Malo, 60 miles south west of Britain and about 30 miles west of Northern France. It is in the same time zone as the UK.

Is it politically stable?

Yes. The Island has its own parliament, The States of Deliberation, which is democratically elected. There are no political parties in Guernsey and therefore the Island is not prone to pendulum swings in regime or policy. The States is responsible for domestic affairs, its economy and tax regime. Guernsey enjoys full fiscal autonomy in tax and regulatory matters.

What is the relationship to the UK and European Union?

As a Crown Dependency, the Island's ties to the UK are through the Crown rather than the British Parliament, where Guernsey has no representation. The Lieutenant Governor is Her Majesty's personal representative and official channel of communication between the Crown and the UK Government and Guernsey. Special terms were negotiated for the Channel Islands on the UK's accession to the EEC. These are contained in Protocol 3 to the Treaty of Accession. The effect of the protocol is that the Island is within the Common Customs Area and the Common External Tariff, which allows access to EEC countries of physical exports without tariff barriers. Other Community rules do not apply to Guernsey, unless voluntarily accepted.

Does Guernsey have any compensation schemes?

Yes. The Guernsey Banking Compensation Scheme came into effect on 26 November 2008 following the collapse of Landsbanki. The scheme covers all 'qualifying deposits' (mainly those from personal retail depositors, wherever they live) in licensed banks on Guernsey. It provides compensation of up to £50,000 per person in respect of that bank. It aims to pay compensation within three months of a bank failure. However, be aware that the maximum total amount of compensation is capped at £100 million in any 5 year period. If the limit was exceeded, compensation could be reduced.

Will my savings and investments be tax free?

Like many offshore financial centres, Guernsey benefits from a low tax regime. There is currently no withholding tax on dividends paid, no capital gains tax and no 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 have to comply with the European Union Savings Directive (EUSD). So if you have savings in Guernsey and reside in an EU country you will be given the option to have the Retention Tax automatically deducted at source from interest earned on savings at 35% commencing July 2011, or opt for disclosure of interest payments and not have Retention Tax applied. In addition, taxes such as death duties or inheritance taxes may well be bound by your domicile, rather than residence.

Does Guernsey have any tax agreements with other countries?

Yes. Guernsey has signed a number of tax agreements with other jurisdictions. Guernsey has signed Double Taxation Agreements (DTA) with Jersey and the UK, Australia, Denmark, the Faroes, Finland, Greenland, Iceland, Ireland, New Zealand, Norway and Sweden. Guernsey has also signed Tax Information Exchange Agreement (TIEA) with Australia, Denmark, the Faroes, Finland, France, Germany, Greenland, Iceland, Ireland, the Netherlands, New Zealand, Norway, Portugal, Sweden, the UK and the US.

What range of financial services are on offer to expats?

Guernsey is a well established financial centre and offers the full range of financial services from simple deposit taking services to wealth management and is a specialist QROPS provider. There are also personal banking and investment services, offshore trusts, pensions and associated fiduciary services such as accountants and lawyers.

What providers operate from Guernsey?

You will find that many of the UK high street banks and financial institutions have a base in Guernsey such as Barclays, Clydesdale Bank International, Skipton International, Close Brothers as well as global operations such as Credit Suisse, BNP Paribas and Deutsche Bank. All providers regulated to do business from Guernsey can be found on the Guernsey Financial Services website. 

Do I need to be an expat from a particular part of the world to use Guernsey?

No. Guernsey offers its services to expats all over the world. However, due to its proximity to the UK it is a popular with British expats.

Why should I use Guernsey?

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.

Anything else I need to know?

In 2008 Landsbanki Guernsey collapsed following the demise of its Icelandic parent. At the time, Guernsey did not have a Depositor Compensation Scheme. It has since introduced a scheme, which offers depositors compensation up to £50,000 per individual. However, Guernsey did not make the scheme retrospective so it did not cover depositors in Landsbanki and depositors are now reliant on payouts from any monies recovered in the collapsed bank. Many of these savers initially banked with Cheshire, which was acquired by Landsbanki.