Tue, 20/12/2011 - 18:16
By Peter Niven – No matter whether fund managers are considering relocating personally and/or corporately, there are few better options than Guernsey. The island’s coastline of cliffs, beaches and harbour ports combines with its French influence to provide a relaxed lifestyle in a temperate climate, in an environment where there is also a thriving international finance centre, including a leading investment fund industry.
Lifestyle. Guernsey combines many of the reassuring elements of UK culture with the benefits of living abroad. For example, the island is English-speaking, uses the pound sterling and is in the same time zone as the UK, but enjoys a more temperate climate similar to northern France (see box 1). In addition, there are short journey times for on-island commuting, a good range of cafés, bars, restaurants and shops, and a host of recreational opportunities ranging from yachting and water activities to sport and music.
Integration. Moving to Guernsey is made easy by the potential for seamless integration into the local community, where there is no distinct divide between the native population and new arrivals.
Tax. The standard rate of personal income tax is 20 per cent, social security is levied at 6 per cent on salaries up to GBP105,144 (from January 2012), with personal allowances of GBP9,200 (from January 2012). In addition, individuals or married couples can take advantage of various tax capping arrangements (see box 2). Guernsey is particularly attractive because there are no capital taxes, wealth taxes, gift taxes, inheritance taxes or indirect sales taxes.
Education. Guernsey provides an extremely high-quality level of schooling. There is no shortage of places, UK curriculum and examinations are followed, and results are impressive. Many students continue their studies at UK universities, although further courses and qualifications are also increasingly available on-island.
Housing. There are no restrictions on purchasing property, but there are on occupation. Any EU national may take up residence in an open market property; local market properties are available to those qualifying by birth or period of residency, or moving to the island as a designated key worker.
Financial services infrastructure. Guernsey plays host to a finance industry with unique breadth and depth (see box 3), including an investment fund industry with particular specialisation in servicing alternatives such as private equity, property, hedge funds and funds of hedge funds as well as other niche asset classes. These providers are supported by expert lawyers and accountants, a dynamic stock exchange, world-class telecommunications and a robust yet pragmatic regulator.
Reputation. Over the past five decades the island has established a reputation as a leading international finance centre providing a wide range of products and services to a global client base at the very highest standards. Guernsey has been commended by the IMF for its standards of regulation and was among the first to be placed on the OECD ‘white list’, as well as being commended by the OECD Global Forum for its commitment to tax transparency and exchange of information.
Tax. Guernsey is reviewing its system of corporate taxation but is committed to maintaining an internationally compliant and competitive regime, including an exempt regime for collective investment schemes and certain associated entities. Currently in place is ‘Zero-10’, where all companies are taxed at 0 per cent except for banks, which are liable at 10 per cent on certain activities. There is no withholding tax on dividends paid, no capital gains tax and no indirect sales tax. Employers pay social insurance on payroll capped at a rate of 6.5 per cent on a maximum salary of GBP125,268 per employee.
Travel links. Guernsey’s links to the UK (both London and the wider regions) and continental Europe mean that travelling for business or to visit family and friends is quick and simple. For example, the actual flight time to and from London is usually 45 minutes, enabling day trips in either direction.
Guernsey has already attracted some high profile individuals and firms from the funds world (see box 4), and we believe that the blend of island life and a leading international financial centre provides the ideal combination for you and/or your business. Visit www.liveguernsey.com to find out more about improving your work/life balance.
Peter Niven is chief executive of Guernsey Finance
Guernsey: in brief
Situated in Europe between the UK and France
Area: 24 square miles (62 square kilometres); population: 60,000
A British crown dependency
A special relationship with the EU
Currency: Sterling (GBP)
Same time zone as the UK
Transport links to both UK and Europe
Personal tax cap – explained
A tax cap is available that applies equally to individuals or married couples and limits their income tax liability in any fiscal year. The cap is GBP110,000 for non-Guernsey sourced income and GBP220,000 for Guernsey-sourced income.
The overall cap for an individual (or married couple) is GBP220,000, regardless of source of income. Therefore, if an individual or married couple has income over GBP1 million (both Guernsey- and non-Guernsey-sourced) then, with a flat rate of 20 per cent, the tax cap would apply and their Guernsey tax liability would be limited to GBP220,000. Any income in excess of the GBP1 million would not be taxed. If all income was non-Guernsey-sourced, the maximum tax payable would be GBP110,000 (all figures apply from January 2012.
Guernsey as a financial centre: quick facts
37 licensed banks with more than GBP114bn in deposits
Investment fund business with net assets of more than GBP270bn
An investment management and stockbroking sector with more than GBP85bn in assets
More than 150 fiduciaries holding more than GBP350bn in assets in trusts and companies
World leader for Qualifying Recognised Overseas Pension Schemes (QROPS)
No. 1 captive insurance domicile in Europe; fourth in the world
(Re)locating to Guernsey
The most high-profile fund manager to relocate to Guernsey is Guy Hands, chairman of Terra Firma. His firm has also established a significant operation in the island, alongside other private equity houses such as EQT and Permira. Another significant player in the private equity industry, Jon Moulton, chairman of Better Capital, has bought a house in Guernsey, and his investment company is domiciled and administered in the island.
BlueCrest Capital, the third largest hedge fund manager in Europe, relocated its headquarters from London to Guernsey in 2010 and shortly afterwards investment manager and stockbroker Shore Capital followed suit when its group managing director, Graham Shore, moved to the island. He has been joined by Stephen Lansdown, co-founder of financial services firm Hargreaves Lansdown and now owner and chairman of Bristol City Football Club.
Guernsey has also attracted world-renowned names such as JP Morgan, Bank of New York Mellon, Capita and Citco to establish fund administration operations in recent years, joined by other boutique fund servicing firms such as Custom House and Alter Domus, which has a particular specialism in the private equity sphere.
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