Guernsey, Channel Islands

All Guernsey-registered companies are regarded as tax resident on the island unless granted exempt company status. In addition, a company will be treated as a resident in Guernsey (regardless of where it is incorporated) if shareholder control is exercised by persons resident on the island.

From 1 January 2019, Guernsey amended the laws governing corporate residence to include a ‘central management and control’ element into the test of corporate residence. From 1 January 2019, a company is tax resident in Guernsey if:

• it is controlled in Guernsey, or is centrally managed and controlled in Guernsey in that year of charge, or
• it is incorporated in Guernsey and has not been granted tax-exempt status.

An exception is granted where the company can demonstrate that it satisfies the following conditions, in which case, it will not be considered resident even if it is incorporated or controlled in Guernsey:

• the company is tax resident in another jurisdiction under its domestic law
• the company is centrally managed and controlled in this jurisdiction, and
• either:
  • the company is tax resident in this jurisdiction by reason of a double taxation treaty (DTT) where a tie-breaker clause applies, or
  • the highest rate of tax on a company in this jurisdiction is at least 10%.

The company must also show that its residency status in the overseas jurisdiction is not motivated by the avoidance, reduction, or deferral of the liability of any person to tax.

Permanent establishment (PE)

The Income Tax (Guernsey) Law, 1975 defines PE as including:

• a branch
• a factory, shop, workshop, quarry, or building site, or
• a place of management.

Note that the fact that a body’s directors regularly meet at a particular place does not, in itself, make that place a PE of that body.