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3. CORPORATE RESIDENCE

A company is considered as a resident if it is incorporated under the laws of Guernsey or is controlled in through share-holding or voting rights in Guernsey.

However, Budget 2019 has amended the definition of corporate residence. Effective from 1 January 2019, a company is treated as tax resident in Guernsey in a year of charge, if:

  • It is controlled in Guernsey, or is centrally managed and controlled in Guernsey in the year of charge; or
  • It is incorporated in Guernsey and has not been granted an exemption from tax for the year of charge under any ordinance made under the tax law.

However, a company will not be treated as resident in Guernsey in a year of charge, even if it is incorporated or controlled in Guernsey, if it is proved to the satisfaction of the Guernsey revenue services that:

  • The company is a tax resident in another territory under the domestic law of that territory, and
  • The company’s business is centrally managed and controlled in the other territory, and
  • Either:
    • The company is tax resident in the other territory in accordance with a double taxation arrangement, in which a tie-breaker clause applies, or
    • The highest rate of tax on a company in the other territory is at least 10%, and
  • The company’s tax resident status in the other territory is not motivated by the avoidance, reduction or deferral of the liability of any person to tax.

Guernsey has published a circular on 11 March 2019 in respect of new registration and other requirements related to changes in corporate tax residence rules. When a foreign company is considered a resident in Guernsey, the company is required to:

  • Register as a foreign incorporated company centrally managed and controlled in Guernsey;
  • File tax return;
  • Ensure Guernsey's economic substance requirements.

Similarly, when a Guernsey incorporated or controlled company is considered as non-tax resident in Guernsey, it is required to:

  • submit certification of tax residence in another jurisdiction;
  • submit confirmation that the company is centrally managed and controlled in that jurisdiction;
  • submit confirmation of at least a 10% tax rate in the other jurisdiction or the existence of a tax treaty with the other jurisdiction.

If the company is considered as a non-resident, it will be required to submit a non-resident declaration annually, instead of a corporate tax return, and will not be subject to the substance requirements in Guernsey.

Further, resident companies carrying on relevant activities are required to ensure that real economic activity is being carried on in Guernsey (See Sec 13.1. for details).