Publication:

Living in Guernsey - Tax Residence

29 June 2017

Mark Savage , Tax Director |
John Bradley , Tax Director |

Guernsey tax residence for an individual is established on the basis of the number of days spent in the Island. Prior to 2006, an individual’s tax residence could be dependent on whether they have available accommodation in the Island and other subjective factors such as having a place of business in Guernsey, the person’s domicile and habits of life.

There are four categories of residence for Guernsey tax purposes. The following rules establish whether an individual is “principally resident”, “solely resident”, “resident only” or “non-resident”.

 

 “Principally Resident”

An individual will be treated as “principally resident” in a calendar year if:

  1. he spends at least 182 days in Guernsey during the year
  2. he spends at least 91 days in Guernsey during the year and, during the four preceding calendar years, he has spent at least 730 days in Guernsey
  3. he takes up permanent residence in the Island. For this purpose, an individual will be treated as taking up permanent residence in a calendar year if he is treated as “resident only” in the year, as described above, and is “solely resident” or “principally resident” in the following calendar year.

An individual who is “principally resident” in Guernsey is liable to Guernsey income tax on their total worldwide income wherever it arises.

 

“Solely Resident”

An individual will be treated as “solely resident” in Guernsey in a calendar year if:

  1. he spends 91 days or more in Guernsey during the year (or 35 days or more in the year but 365 days or more during the four preceding years)
  2. he spends less than 91 days in one other place during a calendar year. In other words, if an individual cannot be treated as resident (under Guernsey tax rules) in one other country during a year, he will be treated as “solely resident” in Guernsey.

An individual who is “solely resident” in Guernsey is liable to Guernsey income tax on their total worldwide income wherever it arises.

 

“Resident Only”

An individual is regarded as “resident only” in Guernsey for tax purposes in a calendar year if:

  1. he spends 91 days or more in Guernsey during the year (or 35 days or more in the year but 365 days or more during the four preceding years)
  2. he spends 91 days or more in one other jurisdiction during the calendar year.

Since 2009, a “resident only” individual can elect to pay a minimum annual charge. The annual charge is currently set at £30,000. The election takes the form of a declaration that income from Guernsey sources did not exceed £150,000 (at 20% this would generate a tax liability of £30,000). If Guernsey source income exceeds the relevant amount, further tax is due on the excess. The States of Guernsey has given an undertaking that it will not further increase the charge until 2021 at the earliest.

The declaration effectively constitutes the annual filing of the individual’s tax return and no other return is required. The same annual charge applies for a married couple as it does for an individual.

All foreign income can be ignored whether or not it is remitted to Guernsey.

If the election is not made by a “resident only” individual, their liability to Guernsey income tax extends to their total worldwide income with an entitlement to a pro-rated personal allowance based on the time they spent in Guernsey.

Remittance basis is available in certain circumstances such as if a “resident only” individual is only in Guernsey by virtue of their employment. In this case, only Guernsey source income and foreign income remitted to Guernsey is taxable with a pro-rated personal allowance based on the time they spent in Guernsey.

 

“Non-resident”

An individual who does not fall within the “resident only”, “solely resident” or “principally resident” categories.

An individual who is “non-resident” is generally only liable to Guernsey income tax on Guernsey profits arising from unincorporated businesses carried on in Guernsey, income from employment in Guernsey and on Guernsey property development and rental income. Passive investment income is generally not taxable.

 

Day in Guernsey

For Guernsey tax purposes, a “day” is treated as being spent in Guernsey if an individual is in the Island at midnight. As such, days of arrival are counted but days of departure are ignored.

 

A Note of Caution

An individual who is “resident only” in a particular year will be treated as “principally resident” in that year if he becomes “principally resident” in the following year. This is a trap that could significantly increase a person’s prior year tax liability.