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Expat Briefing Editorial Team, 06 January, 2017
Expat Briefing – Guernsey – A Hidden Gem
With its mild climate, clean and pristine beaches, and dynamic business environment offering interesting career opportunities, the island of Guernsey has been described as a "hidden gem" in the English Channel.
Introduction to Guernsey
The Bailiwick of Guernsey includes the inhabited islands of Guernsey, Alderney, Sark, Herm, Jethou, Brecqou and Lihou. Guernsey itself is the second largest of the Channel Islands and is roughly triangular in shape. It is situated in the Gulf of St Malo 130 kilometers south of England and only 48 kilometers west of Normandy, France. The island has a land area of 65 sq. km.
Guernsey enjoys a maritime climate; snow and severe frost are rare. Annual rainfall is between 75 and 90 centimeters, but water on the island is sometimes in short supply, being supplemented by seawater distillation.
The main town is St Peter Port, which has the character of a traditional fishing village, and is overlooked by the mediaeval Castle Cornet.
One of the latest estimates put the population of Guernsey at just under 66,000 in July 2016. English is the main and official language, although French is widely spoken, and a Norman patois is used in the countryside.
Culturally, the Channel Islands owe far more to England than to any other source, although there are traces of French culture, and the legal and administrative systems are a hybrid of Anglo-Saxon and Continental forms.
As a Crown Dependency of the British Isles, the Government of the United Kingdom is responsible for the conduct of the external relations and defense of the Island, but otherwise Guernsey is self-governing, including in the area of taxation.
Internal affairs of Guernsey are governed by the island's parliament, The States of Deliberation. The States, as it is usually referred to, is both the legislative and executive body, and has 45 seats. The nearby islands of Alderney and Sark have their own parliaments. The virtual absence of party politics encourages a high degree of consensus and contributes to political and economic stability.
The island has its own courts. Historically, the legal system has continental (Civil Code) origins, but over time English common law has come to have greater influence. Commercial and business law is mostly Anglo-Saxon in nature, and English precedents are often followed. Some UK legislation is adopted as such by Guernsey by agreement with the British Government. The ultimate court of appeal is the English Privy Council.
Guernsey is not a member of the EU. Protocol No 3 of the UK's Treaty of Accession to the EU excludes the island from most of the effects of the Treaty, other than those concerning trade in goods. This means that there is free movement of industrial and agricultural goods between the island and the UK; and between the island and EU and EEA countries. The island also applies the external common customs tariff of the EU.
However, it remains unclear how Britain's decision to leave the EU will affect Guernsey's legal relationship with the continent.
The Finance Centre
Traditionally, Guernsey's "offshore" industries were geared towards providing wealth management services, predominantly to wealthy residents of the United Kingdom. Successive tightenings of anti-avoidance legislation in the UK have compelled Guernsey's finance industry to seek out new markets with a number of high-profile marketing campaigns in the Near and Far East. These are now starting to bear fruit as interest grows in Guernsey's wealth management offerings among the rising population of newly affluent individuals in the emerging economies of the Middle East and Asia; one of the latest initiatives was the signing of a Memorandum of Understanding by Guernsey Finance and the Shanghai Family Office Union in December 2015 to support business development initiatives between the two bodies. And in March 2016, the Guernsey Investment Fund Association signed an MoU with the China Association of Private Equity.
Guernsey has facilitated growth in its finance center by passing innovative new laws, such as the foundations law and a new image rights register. Guernsey also has burgeoning funds and insurance sectors, remains an important offshore banking center, plays a vital role in capital raising on the London Stock Exchange, and recently opened an aircraft registry.
The jurisdiction has a favorable personal and corporate tax regime with no capital gains, inheritance or value-added taxes. The tax regime meets OECD standards of transparency and information exchange.
The personal tax rate is a flat 20 percent, after deduction of personal allowances and reliefs with the facility, for those with high incomes, to cap their liability. Additionally, there is a special regime for those who are resident in Guernsey, but not solely or principally resident.
Companies generally pay tax at 0 percent although financial services companies pay tax at 10 percent and utility companies at 20 percent.
It is the employer's responsibility to deduct tax from employees and pay this to the Income Tax Office on a quarterly basis. This is done through the ETI (Employees Tax Instalment) Scheme, equivalent to 'pay-as-you-earn' in other jurisdictions. Free software is available to help employers manage Income Tax and Social Security payments.
On July 1, 2008 a new Guernsey Companies Law was introduced in parallel with a new Guernsey Registry. This saw the Island's system for company formation and administration move from a court-based model to a streamlined statutory process. The Registry is utilizing new technology to provide users with incorporations in 15 minutes for prices starting from GBP100 whilst maintaining the Island's hallmarks of personalized service. The Registry also incorporates the office of the Intellectual Property Registrar. Online searches and online filing submissions are the norm.
The 2008 Companies Law consolidated much of the companies legislation enacted in the wake of the Companies (Guernsey) Law, 1994.
The 2008 Law has been well-received and has proved a successful piece of legislation for Guernsey – providing a competitive and leading framework from which to carry out business locally, nationally and on an international platform.
The following company formats can be formed under Guernsey company law: Limited Companies (both private and public and limited by shares or by guarantee); Limited Liability Partnerships; Limited Partnerships; Trusts; and Foundations.
When registering a business in Guernsey it is a legal requirement to inform the Income Tax Office about the nature of the business, the date of its commencement and an estimate of its profits in the first year of trading, if possible.
It is possible in certain cases to migrate an existing company from an overseas jurisdiction to Guernsey. This is known in Guernsey as registration of an overseas company as a Guernsey company.
This is usually dependent on whether the company laws in the jurisdiction in which the company is currently registered allow companies to migrate. UK companies legislation is one example of a jurisdiction which does not permit such migrations.
Guernsey's Government is pro-business and tends not to put administrative and regulatory obstacles in the path of businesses. Hence, many companies set up on the island with minimal or no contact with the Government. However, the Commerce and Employment Department has a Business Relationship Manager should new companies wish to establish contact with the Government.
There is a diverse range of opportunities for buying or renting business premises depending on the needs of the business. There are a number of significant office developments around the Island offering unique locations ranging from high quality new builds to prominent historic buildings in the center of St Peter Port.
The refurbishment and re-use of the existing office stock in the main centers is encouraged and therefore there are always opportunities for purchasing or renting premises in prime locations.
A contract of employment is a legally binding agreement made between an employee and an employer when an offer of a job is accepted.
Under Guernsey law workers are entitled to be paid a minimum wage. From January 1, 2017, the Adult Rate (18 years and over) is GBP7.20 per hour (GBP6.85 prior to January 1, 2017) and the Young Person's Rate (16 and 17 years old ) is GBP6.50 per hour (GBP6.10 prior to January 1, 2017).
The Employment Relations Service has created a straightforward guide on employment rights, including information on terms and conditions of employment, pay slips, periods of notice, unfair dismissal, discrimination and minimum wage.
A wide range of social security benefits are available to Guernsey and Alderney residents. Reciprocal agreements exist with a number of countries to preserve social insurance entitlements for migrant workers.
Benefits available include health benefits, sickness and unemployment as well as old age pensions and long term care. Employees pay 6 percent of their gross earnings towards social security and employers pay 6.5 percent.
Employees over age 65 do not have to pay the employed person's contribution rate, but the employer liability to pay remains for any employee over the age of 65.
In general terms, if businesses intend to employ nationals of countries outside the European Economic Area, then a work permit will be required for those people.
Work Permits in Guernsey are issued by the Guernsey Border Agency, part of the Home Department.
Guernsey is a small island with a growing population and economy, and as such the limited housing stock of about 22,000 dwellings is tightly controlled to ensure that there is enough housing to meet the needs of its residents.
While there are no controls over who can own a property on the island, there are rules in place regulating who can occupy the property.
The housing market is split into two sectors: the Local Market, where there are controls on who can live in the accommodation and for how long; and the Open Market where properties can be owned and lived in by anyone, subject to certain restrictions. There are currently around 1,700 properties (private dwellings) on the Open Market register and a number of local estate agents are Open Market specialists. The 15 transactions which took place on the open market in the third quarter of 2015 had a median average price of GBP872,500.
Most people in Guernsey live in local market accommodation and anyone seeking to take up residence in Guernsey who is not a qualified resident – essentially someone born in the islands – or the immediate family of one can generally only live in the local market under a license.
However, the process of relocating staff from abroad to work in a business in Guernsey is not as daunting as the above summary appears. The Housing Department grants Employment Related Housing Licenses, (also known as Right to Work documents) which enable employers to recruit staff who are not resident in Guernsey. These licenses enable essential staff to buy or rent local market accommodation. However, the Department will seek to determine whether the skills required by the business are already available on the Island before such a license is granted.
There are different types of essential license:
In March 2016, lawmakers in Guernsey approved a new Population Management Law which aims to "help businesses address the skills and manpower gaps in the islands evolving workforce."
When the new law comes into operation on April 3, 2017, it will provide for a new framework for the management of the size and make-up of the island's population, replacing the existing Housing Control Law and the Right to Work Law.
After the commencement of the new law, anyone who has lived lawfully in the Local Market for 8 consecutive years will become an "Established Resident." This will enable them to occupy Local Market accommodation free of restrictions. However, it will remain the case that residence in Open Market properties will not generally count towards residential qualifications.
Life In Guernsey
Although some people might consider Guernsey's diminutive size as a disadvantage, it certainly has its upsides too. With the island nine miles long by six miles wide, most places are little more than a few minutes' drive away from each other, so one doesn't have to worry about getting stuck on gridlocked motorways or broken-down trains. For business people this is a positive boon, giving them the ability to set up several face-to-face meetings in a single day.
"Guernsey is a great place to live and do business," says Business Guernsey. "A hidden gem nestled in the English Channel, the Island not only offers a geographically convenient business center close to many of the major European cities, but also a safe and friendly place to live, something often lost in the hustle and bustle of today's business world."
With its mild climate, abundant beaches (of which there are 27) and breathtaking coastal scenery, there are plenty of opportunities to enjoy the outdoor lifestyle in Guernsey. With over 28 miles of cliff paths, sweeping bays and rural lanes there are plenty of opportunities to get to know the Island. Naturally, water sports are also widely enjoyed, including yachting, kayaking, sailing and windsurfing.
Private health and fitness clubs are also available offering a range of facilities, and there are two 18-hole and one 9-hole golf course.
What's more, crime rates are low in comparison to the UK and other large countries, making Guernsey a family-friendly location.
The main center of economic and social life is of course St Peter's Port, which offers a mix of boutique shops and larger branded shops, as well as small shops offering locally made products and antiques. There are also regular markets and other events taking place in the town, including an annual food festival. Indeed, Guernsey has a growing reputation for culinary excellence, with around 90 restaurants on the island mainly using fresh local produce.
Guernsey offers an excellent education system with free schooling for all students up to the age of 18. There are also three grant-aided private colleges on the Island.
The compulsory age of school attendance in Guernsey is from five to 16 years, with a number of opportunities available to pupils if they wish to continue their studies post 16.
Although Guernsey does not have its own university there are still plenty of opportunities for further education such as Open University and higher education courses.
The States of Guernsey spend more on health and social care than on any other area of government reflecting the high standard of these services within the Island and the value placed on ensuring healthy living. This is reflected in an average life expectancy of 80 years, higher than that of the UK.
The healthcare system in Guernsey is different to that of the National Health Service (NHS) in the UK. All primary care is provided on a private basis whilst some secondary care and specialist services are free. Specialist (secondary care) services are only accessed via a referral from a GP. There is no reciprocal health agreement between Guernsey and the UK so it is advised that prospective residents consider taking out health insurance. Visits to a general practitioner and accident and emergency will incur a charge, as will dental appointments, physiotherapy and use of an ambulance.
Getting To and From Guernsey
Although it may appear remote on the map, Guernsey is fairly accessible by air from the UK and a number of European cities, and there are regular ferry services between Guernsey and the south coast of England, France and Jersey.
By air Guernsey is about 45 minutes flying time from London Gatwick and about three hours by boat from Portsmouth, Poole and Weymouth.
Five airlines operate flights from Guernsey to destinations in the UK and Europe, including Aurigny, Flybe, Blue Islands, AirBerlin and Fly VLM.
Condor Ferries operates a fast service between Guernsey, England, France and Jersey while Manches Iles Express operates a route between Guernsey and Dilette in France.
Passengers arriving from the UK or the Republic of Ireland do not need a passport, but do need to provide some form of photographic identification. Passengers arriving from outside of these two countries do need a passport, although European Economic Area (the EU, Iceland, Liechtenstein and Norway) and Swiss nationals can use their national identity cards.
Certain Non-British/EEA nationals require a visa to enter Guernsey.