Guernsey, Channel Islands
Companies paying dividends to Guernsey resident individuals are required to deduct or account for the difference between the tax incurred by the company and the shareholder’s individual tax rate (20%) on actual distributions.
A company is required to withhold tax when it is acting as an agent and making payments to a non-resident liable to Guernsey tax.
Guernsey does not levy any other forms of withholding tax (WHT).
Double taxation treaties (DTTs)
The table below sets out the rates of WHT applicable to the most common payments of dividends and interest under Guernsey domestic law where such a liability arises and the reduced rates that may be available under an applicable DTT. Please refer to specific treaties to ensure the values are up to date.
|Resident corporations||0 (1)||0 (1)|
|Resident individuals||0/10/20 (2)||0 (3)|
|Non-resident corporations and individuals:|
|Isle of Man||0||0|
|United Kingdom||N/A (6, 7)||N/A (6, 7)|
- Resident corporations receiving dividends and interest are not subject to any WHT.
- For resident individuals, if the income has been taxed on the paying company at 0%, a 20% deduction should be made. If the income has been taxed on the paying company at 10%, 10% WHT should be applied. If the income has been taxed on the paying company at 20%, there should be no deduction at source.
- Resident individuals are paid interest gross, without any WHT; however, individuals are required to file an annual tax return and pay 20% income tax on any interest received.
- Where a reduced rate of withholding is allowed by any treaty, whether on dividends or interest, it is usual for this reduced rate to be stated not to apply to amounts that are in excess of a normal commercial rate of interest, or where the dividend or interest is effectively connected to a PE in Guernsey of the recipient; such general limitations are not specifically indicated in the table. Moreover, note the general requirement for dividends and/or interest to be beneficially owned by the recipient in order to access benefits under a treaty.
- Dividends paid by a company that is a resident of Guernsey to a resident of Luxembourg may be taxed in Luxembourg. However, such dividends may also be taxed in Guernsey, and if the beneficial owner of the dividends is a resident of Luxembourg, the tax charged may not exceed 5% of the gross amount of the dividends if the beneficial owner is a company that directly holds at least 10% of the capital of the company paying the dividends or 15% of the gross amount of the dividends in all other cases.
- The Explanatory Note to the Guernsey-United Kingdom DTT specifically excludes dividends and interest from the scope of the DTT.
- The revised Guernsey-UK DTT comes into force in respect of taxes withheld at source by the United Kingdom and Guernsey from 1 March 2019.