As is generally known, the taxation structure in Guernsey is an extremely attractive one to residents. The States of Guernsey levies its own rate of income tax which for residents has not altered for over 20 years. It is stated policy of the States that the basic tax structure should not be changed as they believe that the policy of low taxation has served the Island well in the last few decades. In many ways 20p in the £1 has had a most persuasive influence in setting the climate for economic development.
In 2008 the taxation of Companies (as opposed to residents) changed from a flat rate across the board to a three tier system. Companies now pay either the Standard rate, Intermediate Rate or the Higher rate according to their type of business:
- Company Standard Rate – 0% (Income from businesses, offices and employment and other sources)
- Company Intermediate Rate – 10% (income from banking business)
- Company Higher Rate – 20% (income from trading activities regulated by the Office of the Director General of Utility Regulation, and income from the ownership of land and buildings)
The result is an even more attractive environment for certain types of Company to do business.
There are no Capital Gains Taxes, no Inheritance or Capital Transfer Taxes nor Value Added or Withholding Taxes. Property Rates remain well below that of the UK.
When purchasing property by private treaty the purchaser pays approximately 3.75% of the purchase price in taxes and legal fees. If a property is purchased by share transfer then the costs are reduced.