Guernsey, Channel Islands
The tax year runs from 1 January to 31 December, although companies can adopt a year-end of their choice.
It is compulsory for all Guernsey companies to file their tax returns online.
The format of the Guernsey income tax return was altered in respect of the accounting periods commencing on or after 1 January 2019 to allow the incorporation of the Economic Substance Regulations.
Companies are required to disclose where they are captured by the Regulations, in what capacity, and make several declarations as to whether and how they meet the substance requirements.
Companies are required to file their income tax return on 30 November following the calendar year in which the accounting period ends. Should a company meet the conditions below, a simplified return may be filed without a computation.
In order to qualify for a simplified return, a company must have none of the following:
- Guernsey employees (other than Directors).
- Guernsey resident beneficial owners.
- Income from utilities (e.g. Guernsey water or electricity companies).
- Income from Guernsey properties.
- Income generated from the licensed cultivation of cannabis plants, including income from the use of those plants for the production of products such as hemp, supplements, and cannabidiol.
- Income from the licensed production of controlled drugs and their licensed usage.
- Income from banking business (with the exception of bank interest), regulated fiduciary activity, licensed insurance business (with respect to domestic insurance business), provision of fund administration services to unconnected third parties, investment management services, licensed insurance intermediary business, licensed insurance manager business, operating an investment exchange under the Protection of Investors (Bailiwick of Guernsey) Law, 1987, compliance and other related activities provided to regulated financial services businesses, or the activity of operating an aircraft registration service within the Bailiwick.
- Loans to Guernsey participators.
- Distributions made to Guernsey resident individuals.
Should a company have Guernsey-resident individual beneficial members and/or make loans to participators, it will be required to submit quarterly returns accounting for distributions and loans advanced.
Partnerships will now have an annual filing requirement (if required by the Director of the GRS) along with submission of financial statements.
Payment of tax
In Guernsey, tax is payable in two instalments, on 30 June and 31 December in the year of charge (calendar year). If liabilities have not been determined, this may necessitate initially raising estimated assessments based on prior year figures and raising a final assessment when the figures are agreed. Once the Revenue Service has received the company’s income tax return, they will issue an assessment detailing the final balancing income tax payment due. This amount will be due to be paid within 30 days of the issuing of the final assessment.
Tax audit process
The Revenue Service will assess each company tax return as and when it is received, and the turnaround time from submission of a return to the issue of a final assessment varies dependent upon the workloads of the Revenue Service but is generally dealt with in around three months.
Statute of limitations
The Director can raise an assessment in respect of any income that has not been assessed at any time no later than six years after the end of the year of charge in which the income arose.
Topics of focus for tax authorities
Guernsey passed regulations requiring certain legal entities carrying on relevant activities to demonstrate the existence of adequate economic substance on the Island. The legislation came into force on 1 January 2019 and imposes certain economic substance requirements on Guernsey resident companies that receive income from certain 'relevant activities'.