Guernsey Accounting & Tax Glossary

Guernsey operates a 0% corporate income tax rate for the vast majority of companies. Standard trading companies pay zero corporation tax on profits. Only specific regulated sectors face a 10% rate: banking businesses, domestic insurance licensees, insurance managers/intermediaries, fiduciaries, and fund administrators. The 0% rate is one of Guernsey's primary commercial attractions and applies regardless of the company's level of profit.

Document Duty is Guernsey's equivalent of stamp duty. It is charged on instruments effecting the transfer of property situated in Guernsey, including real property, shares in property-owning companies, and certain other transactions. Rates range from 0% to 2.5% depending on the type of transaction and the consideration paid.

Guernsey has NO goods and services tax (GST) and NO value added tax (VAT). Unlike the UK, EU, Australia, and most other jurisdictions, Guernsey does not levy any general consumption tax. Businesses operating in Guernsey do not charge VAT on their sales, cannot recover input VAT, and have no VAT registration or filing obligations. This is a major commercial differentiator for Guernsey-based businesses and a key attraction for international structures.

Guernsey taxes individuals resident in the island at a flat rate of 20% on worldwide income. There is no higher rate band, no capital gains tax, and no inheritance tax in Guernsey. Residents benefit from various personal allowances and reliefs that reduce the effective rate. Non-residents are taxed only on Guernsey-sourced income.

Guernsey Social Insurance contributions are mandatory payments made by employers and employees that fund the island's social insurance system, including unemployment benefit, sickness benefit, retirement pension, and other social security benefits. Contributions are collected by the States Insurance Authority and remitted via the ETI (Employees Tax and Insurance) monthly return system.

Guernsey's economic substance requirements were introduced in 2019 under the Economic Substance (Companies and Limited Partnerships) (Guernsey) Law 2018. They apply to Guernsey tax-resident companies earning income from specified 'relevant activities'. Companies earning such income must demonstrate real economic presence in Guernsey: local management and decision-making, adequate employees and expenditure, and core income-generating activities conducted in Guernsey.

A Guernsey Exempt Company is a company incorporated in Guernsey that holds an exemption from corporate income tax granted by the Revenue Service. Historically used for offshore structures, the formal exempt company regime was largely superseded by the zero-10 regime (which made 0% the standard rate). Today it primarily means a company with non-resident shareholders that pays an annual fee and is confirmed exempt from tax on income derived outside Guernsey.

The Guernsey Financial Services Commission (GFSC) is the statutory regulator for financial services in the Bailiwick of Guernsey. It licenses and supervises banks, insurers, investment managers, fund administrators, fiduciaries, and other financial services businesses. Regulated entities pay fees to the GFSC and are subject to its conduct, capital, and reporting rules.

The Guernsey Registry is the government body responsible for incorporating and registering companies in Guernsey. It maintains the official register of Guernsey companies, limited partnerships, foundations, and other legal entities. All Guernsey companies must file an annual validation (similar to a UK confirmation statement) with the Registry and pay an annual fee.

An International Business Entity (IBE) is a specific form of Guernsey company designed for use in international transactions and structures, introduced under the Companies (Guernsey) Law 2008. IBEs have certain restrictions (they cannot conduct business with Guernsey residents or own Guernsey land) but benefit from administrative flexibility. They are primarily used by non-residents for international holding and trading.

A Principal Company in Guernsey's insurance context refers to an insurer licensed in Guernsey that is the primary insured entity, often used in captive insurance structures. More broadly, 'principal' in Guernsey trust and company law refers to the ultimate beneficiary or controlling party behind a structure. In tax terms, the principal company concept is relevant in controlled and affiliated company rules.

The States of Guernsey Revenue Service (commonly called the Revenue Service or the States Revenue Service) is the government body responsible for administering income tax, document duty, and social insurance contributions in Guernsey. It is the equivalent of HMRC in the UK or the IRS in the US. It issues assessments, collects payments, and enforces compliance.