As an independent, self-governing jurisdiction, Guernsey has developed its own system of taxation for companies.
Corporate Tax Rates
There are three rates of tax for companies in Guernsey, with the majority of companies paying the standard rate of 0%.
Company Standard Rate – 0%
This applies to every company, unless their activities fall into one of the two corporate groupings below.
Company Intermediate Rate – 10%
The company intermediate rate applies to income from; banking business, domestic insurance business, fiduciary business, insurance intermediary business, insurance manager business, administration of controlled investments, provision of custody services, provision of investment management individual client services, operation of an investment exchange, compliance and other related activities and income from operating an aviation registry.
Company Higher Rate – 20%
The company higher rate applies to income from trading activities regulated by CICRA, the importation/supply of gas or hydrocarbon oil, large retail business carried on in Guernsey, (with a taxable profit of more than £500,000), the ownership of Guernsey land and buildings, property development and exploitation of land, (including income from the sale of extracted materials), from the business of the cultivation or use of the cannabis plant and from the prescribed production or prescribed use of controlled drugs.
Note that Investment Fund vehicles, (companies, partnerships, unit trusts) may apply for exemption from tax in respect of income from sources outside Guernsey.
It is a legal requirement for new businesses to register with the Revenue Service office. The staff will need be told the nature of the new business, the date of commencement and, if possible, an estimate of profits for the first year of trading.
Income Tax and Social Security
Same day registration of businesses and staff is available with Income Tax and Social Security. This is necessary ahead of employing staff.
Social security contributions
Social Security contributions are required from both employer and employee in respect of any employed person who is over school leaving age and under pension age.
New employers need to register with the Social Security service. The contribution rate for employees is 7.2% of gross earnings, whilst employers pay 6.9%. Self-employed individuals pay 11.9% and non-employed individuals (under pension age) pay 11.3%.
Tax payment matters for employers
New employers should contact the Employees Tax Instalment (ETI) Department at the Revenue Service office who will provide the necessary documents, which will explain how to calculate and deduct tax when paying wages. This is similar to the ‘Pay As You Earn’ system in other jurisdictions. Free software is available to help employers manage Income Tax (and Social Security) payments.
For further information on personal tax, please visit:
Personal Tax and Social Security