Guernsey, Jersey & Alderney
Company formation in brief
The Channel Islands, which include Guernsey, Jersey and Alderney, are self-governing territories that belong to the British Crown but are not part of the UK, having each their own constitution, company laws and taxation practices.
Being traditionally considered as offshore destinations, the Channel Islands have many similarities in the approach to taxation of non-residents, but slightly differ from each other.
Modern corporate law of the islands allows registration of enterprises of various organizational and legal forms, of which the following may be of interest to a foreign investor:
• public and private limited companies
In general, the Channel Islands offshore companies are those which have received one of two preferential tax statuses:
• a tax-exempt company, or
• an international business company
The preferential tax status also requires that companies don’t have local source of income and that beneficial owners of companies are non-residents of the islands.
A closed company must have at least two shareholders (usually no more than 20). Alderney allows registration with one shareholder. A public company must have at least 30 shareholders and publish an official announcement of the issue of its shares. Bearer shares and shares with no par value are not permitted.
A closed company needs only one director. The board of directors of an open company must consist of at least two physical persons.
Every company on the islands needs a secretary (physical or legal person). A director can act as the secretary, unless he is the only director of a closed company.
Directors and secretaries of companies can be non-residents of the Channel Islands (except Jersey companies).
The following four types of trusts are most common in today's legal practice on the Channel Islands:
• Fixed Trust
• Discretionary Trust
• Charitable Trust
• Protective Trust
To obtain a tax-free status, neither the settlor nor the beneficiaries of the trust must be residents of the islands. In addition, the trust property must not include real estate located on the islands, as well as shares, securities and debentures of companies registered on the islands or owning real estate there. However, the trust property can include shares, securities and debentures of offshore companies registered in the islands.
The maximum duration of a trust agreement on the islands is 100 years from the date of its entry into force, unless it is cancelled earlier.
Tax-exempt companies shall pay an annual fee ranging from £ 500 to £ 1,200. It should be emphasized that an application for granting such a status to a company must be submitted annually to the head of the Tax Department - Financial Services Department no later than March 31st, otherwise the company will have to pay regular taxes, and it can be very difficult to restore even the once-lost “exempt” status.
There are no taxes on property, value added or dividends for non-residents on the islands.
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