Guernsey Tax Changes — Live Tracker

What changed

The OECD's Pillar Two global minimum tax framework (GloBE rules) requires jurisdictions with low or zero corporate tax rates to implement a domestic top-up tax for in-scope multinationals, or risk another jurisdiction collecting the top-up tax instead. Guernsey has committed to a QDMTT to bring Guernsey-based entities within large multinational groups up to the 15% effective rate. The rules apply to multinational enterprise groups with annual consolidated revenue of €750 million or more in at least two of the preceding four fiscal years. For the vast majority of Guernsey businesses — SMEs, locally-owned companies, investment funds, captive insurers and mid-sized financial services groups — the Pillar Two QDMTT has no impact. The rules only affect entities that are part of the largest multinationals globally. Guernsey has carefully designed its QDMTT implementation to protect its domestic tax base (ensuring the top-up stays in Guernsey rather than being collected by parent-company jurisdictions) while maintaining compliance with the OECD framework and its commitment to the EU Code of Conduct Group.

Who it affects

• Guernsey entities that are part of multinational enterprise groups with €750m+ consolidated annual revenue
• Guernsey financial services businesses within large international banking or insurance groups
• Guernsey fund management entities within global asset management groups above the threshold
• Standard Guernsey SMEs, investment funds, captive insurers, and locally-owned companies are NOT affected

What to do

In-scope groups must identify their Guernsey entities, assess their effective tax rate (ETR) in Guernsey, and prepare for QDMTT top-up filings. Most groups will require specialist Guernsey tax counsel to navigate the GloBE safe harbours and transitional provisions. Standard Guernsey companies below the threshold should monitor developments but do not need to take action at this stage.

What changed

Since 2023, the Guernsey Revenue Service and GFSC have stepped up coordination on economic substance compliance. The Revenue Service now more actively cross-references the annual substance declaration against company accounts, directorship records, and GFSC licensing data. Companies that claim to meet substance requirements but show no Guernsey-based employees, minimal Guernsey operating expenditure, and no evidence of local board meetings are receiving enquiry letters. The EU Code of Conduct Group continues to monitor Guernsey's substance regime. Guernsey's position on the EU's list of cooperative jurisdictions depends on maintaining effective substance enforcement. This creates political pressure for the Revenue Service to demonstrate real enforcement activity. Key areas of scrutiny: - Holding companies with no evidence of Guernsey-based board meetings - IP companies with no Guernsey-based R&D activity - Finance and leasing companies where all operations appear to be in an overseas jurisdiction - Companies that outsource all functions to overseas service providers rather than Guernsey-based providers

Who it affects

• All Guernsey companies earning income from the 9 relevant activities (banking, insurance, fund management, finance and leasing, headquarters, shipping, holding company, IP, distribution/service centres)
• International Business Entities (IBEs) with passive income
• Companies that have previously filed substance declarations without adequate supporting evidence

What to do

Review your substance position and evidence base now. Confirm that: (1) board meetings are held in Guernsey with directors physically present, (2) minutes record the location and names of physically-present directors, (3) you have identified the specific CIGAs conducted in Guernsey and can evidence them, (4) employee numbers and operating expenditure are proportionate. If in any doubt, commission a substance review from a Guernsey accounting firm or legal adviser before the next annual declaration.

What changed

The personal income tax allowance is reviewed annually by the States of Guernsey as part of the budget process. For 2025, it increased from £13,900 to £15,000 — an increase of £1,100. At the 20% flat rate, this reduces the annual income tax bill for every Guernsey taxpayer by £220. The married/civil partnership allowance, which applies on joint assessment, increased proportionally to £30,000. Additional reliefs reviewed: - Pension contribution relief: maintained at 25% of net earnings, up to £35,000 - Mortgage interest relief on principal private residence: maintained - Private healthcare insurance premium relief: maintained The States budget process for 2026 is expected to include a further review of the personal allowance, though any change has not been announced as of the date of this review.

Who it affects

• All Guernsey-resident individuals paying personal income tax
• Company directors receiving salary from Guernsey companies
• Self-employed individuals based in Guernsey
• Non-residents with Guernsey employment income

What to do

Update payroll software to use the 2025 allowance of £15,000 (£1,250 per month) when calculating ETI deductions. Employees on the standard allowance will have slightly lower tax deductions per month in 2025 compared to 2024. File the annual ETI return using the updated figures.

What changed

The OECD published revised CRS guidance in 2023-2024, including clarifications on the treatment of digital financial assets, fintech products, and the treatment of certain trust and fund structures. Guernsey has transposed these clarifications into its domestic CRS/AEOI legal framework. Key updates: - Crypto-asset reporting framework (CARF): Guernsey has committed to implementing the OECD's new Crypto-Asset Reporting Framework alongside the revised CRS from 2027, requiring crypto-asset service providers operating in Guernsey to report customer account information. This is a significant new requirement for Guernsey's emerging digital asset sector. - Enhanced due diligence: updated guidance on how to classify entities (Active NFE, Passive NFE, Financial Institution) particularly for fund structures and holding companies - Higher penalties for material non-compliance with CRS obligations Guernsey now exchanges CRS data with over 100 jurisdictions. UK residents, EU residents, US persons (via FATCA), and residents of most major economies are automatically reported to their home tax authority if they hold financial accounts in Guernsey.

Who it affects

• GFSC-licensed financial institutions (banks, investment managers, fund administrators, fiduciaries)
• Guernsey trusts and companies treated as Financial Institutions under CRS
• Crypto-asset service providers operating in Guernsey (from 2027 under CARF)
• High-net-worth individuals with Guernsey accounts who have not yet declared them to their home tax authority

What to do

GFSC licensees should review their CRS compliance programmes against the 2024 guidance updates, particularly the entity classification rules for funds and holding structures. Crypto-asset businesses should prepare for CARF implementation from 2027. Individuals with Guernsey accounts should confirm their home-country tax reporting is up to date — Guernsey is no longer a confidential jurisdiction for tax purposes.

What changed

Following the States of Guernsey 2025 budget process, Document Duty rates on property transactions were maintained at the same levels as 2024. No increase was implemented despite rising Guernsey property prices. Document Duty remains: - Residential: 0% up to £250,000; 1% £250,001-£400,000; 1.5% £400,001-£750,000; 2% £750,001-£1,500,000; 2.5% above £1,500,000 - Commercial: 0.5% on first £50,000; 2% on the excess The States has periodically considered introducing a higher band for very high-value properties (above £2m-£3m) to raise revenue from the high-end property market, but no such proposal has been enacted. The 0% band up to £250,000 provides meaningful relief for first-time buyers and those purchasing smaller properties, though median Guernsey house prices are well above this threshold.

Who it affects

• Anyone buying Guernsey residential property
• Anyone buying Guernsey commercial property or land
• Companies and structures acquiring Guernsey real estate

What to do

Budget for Document Duty at the current rates when planning a Guernsey property purchase. Use the banded calculation — not a single flat rate — to estimate your liability. Instruct a Guernsey advocate early in the purchase process to confirm the exact duty and handle the stamping.