The Bailiwick of Guernsey is a Dependency of the British Crown. It is located in the English Channel, and its territory includes some major islands, Guernsey, Alderney, Sark, and Herm, and some smaller isles, Brechou, Lihou, and Jethou. The Bailiwick is located 30 miles from the Normandy shores, and its total area is about 30 square miles. From the administrative perspective, Guernsey is a separate jurisdiction from the United Kingdom and is self-governed by a legislative assembly, the States of Deliberation. The United Kingdom, however, is responsible for defense and international relations.
Guernsey can boast a thriving economy favored by a long record of stable politics and a robust legal system. In recent years, construction, factory, and farming, once Guernsey economy core, have decreased to give way to tourism, the public sector, and professional and financial services. The latter segment includes banking, fund management, and insurance and accounts for more than 30% of total revenues. The favorable tax regime and practical and effective regulation have made Guernsey a reputable and popular jurisdiction to incorporate and administrate companies.
Categories of Companies in Guernsey
Companies registration in Guernsey is ruled by the Companies (Guernsey) Law, 2008, and both standard and cell companies can be established. The regulation features large flexibility, providing the chance to convert a type of company into another. Besides, Guernsey encompasses various classes of companies, including:
- Limited Liability Company. It is the most frequent class of companies as it shields shareholders in the case of insolvency. The liability of shareholders is limited to the unpaid value on their shares. The structure of a limited liability company must include at least one director. The business can have one or more shareholders.
- Guarantee Company. In this type of business structure, there are no shares, and the liability of members is the specific amount they have subscribed to guarantee in the case of debts. Guarantee companies are suitable for social, political, and charitable organizations.
- Unlimited Liability Company. Shareholders hold unlimited liability in the case of the company’s insolvency. The liability has validity for active members and within a year after ceasing membership.
- Mixed Liability Company. The structure includes guarantee members and shareholders, the latter providing either unlimited or limited accountability. This model, for example, is suitable for hybrid companies dealing with international tax regulations.
- Protected Cell Company (PCC). A PCC is a single entity enabled to create cells with separate assets and liabilities. This articulated structure ensures protection to both the core and the satellite cells. Remarkably, the satellite cells do not have any legal nature. In the occurrence of one cell’s insolvency, creditors cannot claim against the core or the other cells.
- Incorporated Cell Company (ICC). An ICC is similar to a PCC, but each cell can have an asset and hold liability for its unpaid debts, yet without involving the healthy cells. All the cells share a single board and cannot act singularly.
Finally, it is worthy of notice that the legislation does not differentiate between public and private companies.
How to Incorporate a Company in Guernsey
Setting up a company in Guernsey is a straightforward procedure that can be done online through a local Corporate Service Provider (CSP). The application must comply with the regulation and contain the memorandum and articles of incorporation.
- The memorandum is the constituent document of the company. It states the type of company, all the relevant data of each member, eventual restrictions on the objects of the company, the volume of share, or the guaranteed amount in the case of insolvency.
- The articles of incorporation cover internal procedures and management regulations. They can be modified through a special decision by the member.
- The memorandum and the articles constitute a contract between the company and the members.
- Proof of payment of the incorporation expenses, which vary depending on the track chosen. Currently, the standard fee is £100 for 24-hour incorporation; fast tracks include 2-hour and 15-minute incorporations, charged £350 and £750, respectively.
The Tax System in Guernsey
Guernsey’s tax regime is very favorable, with the income tax at 0% for most types of companies. Banks, insurance companies, fiduciary businesses, operating an aircraft registry, and profits from investment transactions are subjected to a rate of 10%. For incomes from properties located in Guernsey, from the import and supply of gas and oil, and revenues from the cultivation of cannabis, the tax rate is 20%.
In 2018, to meet the EU Code of Conduct Group for Business Taxation, Guernsey has implemented the law. Since then, resident companies need to show that they have a substantial economic presence in Guernsey. Notably, Guernsey has no inheritance, capital gains, capital transfer, or value-added taxes.
Besides the convenient tax environment, establishing a company in Guernsey offers a series of other valuable advantages, including:
- Robust legal and administrative structure;
- International recognition;
- Presence on the London Stock Exchange and the New York Stock Exchange, among others;
At Prifinance, we offer unrivaled expertise to help dynamic entrepreneurs to set up a company in Guernsey. Choosing the most suitable type of company, carrying out the registration procedure, and calculating the corporate taxes, if any, are some of our advisory services.