Corporate Income Tax Rate              (%)0(a)

Capital Gains Tax Rate                       (%)0 

Branch Tax Rate                                  (%)0(a)

Withholding Tax                                  (%)  

Dividends0                                           (b)

Interest                                                  0 

Royalties                                               0 

Branch Remittance Tax                      0 

Net Operating Losses                        (Years)  

Carryback                                             0(c)

Carryforward                                        Unlimited

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(a)This is the standard corporate income tax rate. For details regarding other rates, see Section B.

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(b)Dividend withholding tax is not imposed on dividends paid to foreign shareholders. See Section B. Dividends paid to Guernsey resident individual shareholders may be subject to withholding tax.

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(c)A carryback for up to two years is available for terminal losses if trade is permanently discontinued.

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TAXES ON CORPORATE INCOME AND GAINS

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Corporate income tax. A Guernsey resident company is subject to income tax on its worldwide income. A company not resident in Guernsey is subject to Guernsey income tax on its Guernsey-source income (other than disregarded company income, such as bank interest), unless a double tax treaty applies. A company is resident in Guernsey if its ultimate shareholder control is in Guernsey (tracing through any intermediary structures) or if it is incorporated in Guernsey. Control for Guernsey tax purposes is determined by reference to beneficial ownership rather than central management and control.

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Rates of corporate income tax. The standard rate of corporate income tax is 0%.

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A 10% rate applies to profits derived from banking business, insurance management, insurance intermediaries, domestic insurance business, regulated fiduciary business, fund administration business, custody services provided by banks and, effective from 1 January 2018, regulated investment management provided to individual clients.

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A 20% rate applies to profits from Guernsey property, regulated utility business, retail business carried on in Guernsey that has a taxable profit of more than GBP500,000 in a year, and the importation and/or supply of hydrocarbon oil or gas.

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Exempt companies. An exempt company regime is available for certain collective-investment schemes. An exempt company is treated as nonresident in Guernsey for tax purposes. It is taxable in Guernsey only on Guernsey-source income, excluding bank interest. Collective-investment schemes (typically unit trusts, investment trusts or bodies involving other forms of public participation) form a substantial sector of the finance industry in Guernsey. Other companies associated with such schemes may also qualify for exemption. Companies pay a fixed annual fee of GBP1,200 to register for exempt status, regardless of their income.

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Capital gains. Capital gains are not taxable in Guernsey.

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Administration. The Guernsey tax year corresponds to the calendar year. Tax payments on account are normally due in two equal installments on 30 June and 31 December of the tax year, with a balancing payment or repayment due after filing and assessment.

An annual tax return is generally required for all Guernsey resident companies and some foreign companies with Guernsey-source income. The annual tax return must be filed electronically by 30 November of the following year. Automatic late filing penalties may be imposed.

If taxable distributions or loans to Guernsey resident individuals are made during the year, a final Distribution Reporter tax return is required to be filed by 15 January following the tax year. Taxes on such events must be withheld at source and paid quarterly by the 15th of the month following the relevant quarter.

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Companies must file annual validation forms with the Guernsey Registry, and pay the relevant filing fee. Fees are based on the type and activity of the company and range from GBP100 to GBP1,000.

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Dividends. No tax is withheld from dividends paid to foreign shareholders of Guernsey companies.

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If dividends are paid to Guernsey resident individual shareholders, the company may be required to withhold tax of up to 20% of the distribution. The amount of tax withheld may be reduced if the company has already suffered tax on the profits distributed. Companies maintain tax pools to track undistributed income (income that has not suffered tax at 20% or more) and tax already suffered. Distributions are required to be matched against undistributed income first.

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Companies may also be required to withhold tax at a rate of 20% if a loan is advanced to a Guernsey resident beneficial member, but some exemptions apply.

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Foreign tax relief. Guernsey grants specific double taxation relief for income from its treaty countries and grants unilateral relief for income from non-treaty countries up to an effective maximum rate of 15%.

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To continue reading, and to obtain the full publication, please visit: https://www.ey.com

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The content is based on information current as of 1 January 2018, unless otherwise indicated in the text of the chapter. Changes to the tax laws and other applicable rules in various countries covered by this publication may be proposed. Therefore, readers should seek independent tax advice from their local and international firms to obtain further information.

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This publication contains information in summary form and is sourced from the Ernst & Young Worldwide Corporate Tax Guide, and is therefore intended for general guidance only. It is not intended to be a substitute for detailed research or the exercise of professional judgment. Neither Aston & Willson LLP  or EYGM Limited nor any other member of an organization can accept any responsibility for loss occasioned to any person acting or refraining from action as a result of any material in this publication. On any specific matter, reference should be made to the appropriate advisor.