Can I Claim Directors' Fees and Remuneration as a Business Expense in Guernsey?
Yes, directors' fees and salaries paid by a Guernsey company to its directors are deductible as trading expenses, subject to the fees being commercially reasonable and at arm's length. Directors resident in Guernsey pay personal income tax at 20% on their fees.
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What Revenue Service, States of Guernsey says
Directors' fees and salaries are deductible if they are genuine remuneration for services rendered at commercial rates. Excessive remuneration to connected-party directors may be challenged by the Revenue Service as a distribution rather than a deductible expense. The Revenue Service states that deductions apply to anyone receiving a wage or salary, including company directors, so tax and social security deductions apply to director pay run through the payroll.
When you can claim
- Monthly salary to an executive director who works in the business
- Annual fees to non-executive directors for board service
- Fees to independent Guernsey resident directors providing genuine governance and substance
- Benefits in kind to directors that are genuinely commercial
When you cannot claim
- Excessive remuneration designed purely to reduce taxable profits in the 10% sector
- Payments to directors that are in substance dividends or profit distributions
- Fees to dormant or nominee directors providing no real service
Good to know
Pro tip: For substance purposes, paying genuine fees to independent Guernsey-resident directors and holding proper board meetings on-island is both a corporate governance requirement and a substance requirement. The fees are deductible for the company and taxable income for the director. Run them through payroll so tax and contributions are deducted.
Important: Repayments of shareholder loans by a company are being added to the definition of a distribution from 2026, with tax of 20% on the loan repayment where the company has undistributed income. An exclusion is planned for repayment of commercial loans to trading companies. Keep director remuneration separate from loan account movements.
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