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Offshore Trusts Report: Guernsey

Legal Framework and Formation Rules and Fees

The Guernsey law of trusts was codified in 1989 along broadly Anglo-Saxon lines in the Trusts (Guernsey) Law 1989, since updated by the Trusts (Guernsey) Law 2007. On the whole it gives extra protection to beneficiaries. This law does not apply directly in Alderney or Sark, but has a substantial influence on trusts in those jurisdictions.

Trust documents are in English. There are no registration requirements for trusts, no fees are payable on formation, and there are no annual reporting requirements other than for resident trusts (ie those with resident beneficiaries). Trust accounts must be kept but there is no audit requirement.

The maximum perpetuity for Guernsey trusts was 100 years, although the introduction of the new legislation in 2007 changed this (see below). The law provides for non-recognition of foreign judgements, and forced heirship provisions in foreign law can be over-ridden.

Trust management, particularly for wealthy UK individuals, was the island's traditional business. Successive tightenings of UK anti-avoidance legislation have reduced the possibilities for UK citizens, but Guernsey's trust business has continued to grow based on a more international clientele. Many Collective Investment Funds are also of course based on trusts.

Several hundred firms offer fiduciary trust services on Guernsey. The island has a very well-developed legal and financial infrastructure for trust management; the highly sophisticated professional services which support the trust sector include lawyers, accountants, investment managers and stockbrokers.

When the beneficiaries of a trust are non-resident, full exemption from Guernsey taxation is given to foreign income and Guernsey bank interest, by concession, whether or not the income is distributed. The trustee of a trust with Guernsey-resident beneficiaries may be charged with tax due on trust income, although the tax is normally assessed directly on the beneficiary. The trustee is entitled to any allowances which would apply to the beneficiary. Unit trusts are treated in the same way as other trusts; the existence of Guernsey unit-holders does not affect exemption, subject to some conditions.

As far as International Trusts are concerned, it is possible to export a Guernsey trust replacing Guernsey trustees with nonresident trustees and changing the proper law of the trust; equally, a trust established in another jurisdiction may migrate to Guernsey by appointing Guernsey resident trustees. Trust accounts must be maintained although they do not require auditing and the trustees of a nonresident trust do not need to submit returns or provide trust accounts to the administrator of income tax.

The Report

Offshore Trusts Guide: Introduction

Offshore Trusts Guide: Jurisdictions

Bahamas Barbados Bermuda British Virgin Islands Cayman Islands Cook Islands Cyprus Gibraltar Guernsey Isle of Man Jersey Liechtenstein Madeira Malta Mauritius Monaco Nevis New Zealand Panama Seychelles Turks & Caicos Vanuatu

Guernsey News

Guernsey's 10-Year-Old Trusts Law 'Ahead Of Its Time'
Friday 23/3/2018
Guernsey's trusts law, which came into force 10 years ago, has been described as "ahead of its time" and "a reminder of the jurisdiction's ability to innovate and adapt to changing market conditions" by leading trust and fiduciary lawyer Russell Clark.

Guernsey Finance Strengthens Hong Kong Presence
Thursday 8/3/2018
Guernsey's financial services promotion agency, Guernsey Finance, says its Hong Kong office has yielded significant benefits for the territory over the past 15 months.

Guernsey Foundations Near 100 Mark
Tuesday 9/1/2018
Almost 100 foundations have now been registered under the Guernsey's five-year-old Foundations Law, Guernsey Finance, the island's financial services promotional agency, has said.

Guernsey, China In Landmark Captive Insurance Partnership
Friday 1/12/2017
Guernsey-based independent insurance manager Alternative Risk Management and Beijing Airport Captive Management Consulting have established a joint venture to create captive structures and provide captive management services for Chinese businesses.

Guernsey Expertise Tapped By Wealthy Philanthropists
Monday 9/10/2017
A sizable new stream of business for the legal sector and other professional service providers is emerging as Guernsey becomes recognized as a centre of excellence for the founding of charitable and philanthropic structures, Guernsey Finance says.

Guernsey Finance Marks A Decade In China
Wednesday 27/9/2017
The signing of cooperation deals with Chinese regulators and industry associations provided Guernsey with the foundation to develop business and build relationships with Chinese service providers and their clients, a recent conference was told.

Cayman Islands Named Leading Specialized IFC
Friday 8/9/2017
The Cayman Islands has again been named the world's number one specialized financial center by the Banker magazine, part of the Financial Times Group.

Abu Dhabi Tax-Free Zone To Launch Foundations
Friday 2/6/2017
Abu Dhabi Global Market, the low-tax international financial center, is seeking feedback on its proposal to allow the formation of "foundations," a trust-like entity widely used in civil law jurisdictions.

Guernsey Issues Warning On 'Sark Company Registry'
Thursday 18/5/2017
The Guernsey Financial Services Commission has issued a warning concerning an entity named "Sark Company Registry," while investigations are ongoing.

Guernsey Funds Sector Grew In 2016
Monday 27/3/2017
The total value of funds business in Guernsey grew by more than GBP28bn (USD32.5bn) last year.