Guernsey International Focus
By Lowtax Editorial
04 April, 2013
The island of Guernsey, one of the Channel Islands between England and France, is a self-governing British Crown dependency with a thriving offshore financial centre.
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 situated in the Gulf of St Malo 130 kilometres south of England and only 48 kilometres west of Normandy, France. The island has a land area of 65 sq. km.
The population of Guernsey is approximately 65,000. English is the main and official language, although French is widely spoken. Although it is home to a select few, mainly British, wealthy expats seeking escape from the UKs increasingly unfavourable fiscal environment, immigration and the property market are tightly controlled because of the limited availability of land and the islands small stock of housing.
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 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.
The Queen of England, as Duke of Normandy, is Head of State, and she is represented on the Island by the Lieutenant Governor, who is appointed by the Crown for a five year term. The Government of the United Kingdom is responsible for the conduct of the external relations and defence of the Island. And despite Guernseys self-governing status, the UK wields considerable influence over the islands in certain areas of tax and economic policy.
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.
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 applies the external common customs tariff of the EU.
Guernsey does not impose Value Added Tax, and does not form part of the fiscal area of the EU, although it has been obliged to apply the EU's Savings Tax Directive, which came into force in July 2005.
The Guernsey's constitutional position in relation to the EU cannot be changed without unanimous agreement of the member states, including of course the UK. Along with its neighbour, Jersey, the island sees its current relationship with the EU as beneficial, and does not seek to change it. But along with the UK, the EU is able to exert its will to change certain laws in the Crown Dependencies, especially in the area of taxation (see below).
The Finance Centre
Traditionally, Guernseys offshore industries were geared towards providing wealth management services, predominately to wealthy residents of the United Kingdom. Successive tightenings of anti-avoidance legislation in the UK have compelled Guernseys 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 Guernseys wealth management offerings among the rising population of newly affluent individuals in the emerging economies of the Middle East and Asia. Guernsey has facilitated this by passing innovative new laws, such as the foundations law and a new image rights register (see below).
Limited by its small geographical size, Guernsey is unsuitable as a base in which to position physical warehousing, distribution or processing operations. However, the island has recently emerged as one of the best jurisdictions for tax optimization for multinationals looking to access the European Union markets and Guernsey structures are frequently used by multinationals looking to raise capital on the stock markets. Indeed, Guernsey remains the top domicile of incorporation globally for non-UK entities listed on the London Stock Exchange, and at the end of December 2012 there were 122 Guernsey-incorporated entities listed on either the Main Market, the Alternative Investment Market (AIM), the Specialist Fund Market (SFM) or as "Trading Only." Guernsey also played host to the first London-listed Initial Public Offering (IPO) of a fund in 2013, that of ICG-Longbow Senior Secured UK Property Debt Investments Limited, which began trading on the London Stock Exchange's main market for listed securities on February 5, 2013.
Another of Guernseys specialisms is insurance, and the island is now considered the jurisdiction of choice for companies to register their captive insurance operations (see below).
Although Guernsey is by no means over-regulated, the Government takes regulation of the finance centre very seriously, and for this reason the jurisdiction is seen as one of the most reputable and transparent IOFCs in the world.
The finance centre is regulated by the Guernsey Financial Services Commission (GFSC), which oversees the regulation of the banking, insurance, investment and fiduciary sectors. Anti-money laundering legislation is in place, and the International Monetary Fund concluded in 2003 and 2011 that Guernsey has demonstrated a high level of compliance with the standards set by the Financial Action Task Force.
Under pressure from the EU and its campaign against harmful tax competition, Guernsey has been obliged to phase out its offshore exempt company forms and put in place a new system of corporate taxation.
The result of Guernsey's Future Taxation Strategy was the introduction of a 'zero/ten' system of corporate tax, under which Guernsey's businesses and corporate entities have been subject to income tax at 0% from the 2008 tax year. However, businesses regulated by the GFSC are charged tax at 10%. The introduction of the 'zero/ten' regime in 2008 saw the end of the 'exempt' company regime in Guernsey.
In 2012, it emerged that Guernsey was planning to expand the scope of its 10% corporate income tax rate to cover the activities of licensed fiduciary businesses, licensed insurers in respect of their domestic business, and licensed insurance intermediaries and managers, effective from January 1, 2013. Presently the 10% rate is levied only on banking institutions and loan companies.
Defending decisions made in the territory's 2013 Budget, Guernsey's Treasury and Resources Minister, Gavin St Pier has said that the proposed measures are a necessary evil to begin reducing the size of the recurring budget deficit and improve the fairness of the tax regime. He observed that "as a direct result of the reduction of some GBP100m in corporate tax receipts, following the introduction of Zero Ten Tax in 2008... the proportion of taxes derived from individuals increased." Therefore, the decision to extend the 10% income tax rate from January 1, 2013, had been taken to distribute the tax burden more fairly, towards companies, he explained. The measure will raise GBP12m. In total, Budget 2013 will slash Guernsey's budget deficit from GBP31-32m (USD52m) in 2012, to GBP17m in 2013, according to the Government.
St Pier also announced in the 2013 Budget that a consultation on taxation is to be launched in the first part of 2013, with changes to be proposed in the 2014 Budget report in October 2013.
However, the future of Guernseys corporate tax regime has been in doubt since almost immediately after it was introduced. This is because the European Commission, which initially backed the jurisdictions corporate tax reforms, doubted whether the regime followed the spirit of its Code of Conduct on Business Taxation, which underpins its harmful tax competition initiative.
Finally, in December 2012, it appeared that the level of uncertainty surrounding Guernseys tax regime had subsided when the Government received confirmation that the Code Groups investigation into the legitimacy of the zero-ten system had been closed.
Earlier in the year, the EU Code of Conduct Group on Business Taxation concluded that the deemed distribution provisions of the island's zero-10 corporate tax regime were harmful and so, to bring its tax regime into compliance with the Code the States agreed to repeal this aspect of the regime from January 1, 2013. Then, in September 2012, the Code Group indicated that the repeal of the deemed distribution regime would indeed remedy its concerns. At its December meeting, the EU's Economic and Financial Affairs Council rubber-stamped the Code Group's assessment so that from January 1, 2013, Guernsey's zero-ten regime is said to meet changing international tax standards.
Welcoming the conclusion of the EU's assessment, Fiona Le Poidevin, the Chief Executive of Guernsey Finance, the promotional agency for the island's financial services industry, said: "It is very pleasing that our zero-ten corporate tax regime has now been formally ratified as compliant by the EU. The deemed distribution provisions primarily affect locally-resident shareholders and therefore it is very much a case of business as usual for the international client base of our finance industry. However, this decision provides extra reassurance for them that Guernsey is a jurisdiction which is willing and able to move quickly to ensure it continues to meet international tax standards, while also retaining its position as an extremely competitive place to do business."
Guernseys Chief Minister, Peter Harwood, said that the importance of compliance was emphasized by the European Commission's new Communication to the European Parliament and European Council on Fighting Tax Fraud and Tax Evasion. This Communication proposes minimum standards of "third country" good governance in tax matters, which would require third territories to have effectively implemented and applied the international standard for transparency and exchange of information; and removed tax measures which are considered harmful in the areas of business tax (as assessed by Code of Conduct Group on Business Taxation).
Harwood said: "It is a testament to the hard work undertaken by all in recent years and the significant European engagement that we are considered both compliant with the principles of the Code of Conduct and also that under the proposals set out by the European Commission we are not considered to be a tax haven. This is a [noteworthy] achievement given the misinformation and misperceptions that continue to be perpetuated in some quarters about our jurisdiction."
Guernsey remains under the transparency spotlight however, and on March 14, 2013, the Government confirmed that the territory is to engage with UK authorities towards the conclusion of a US Foreign Account Tax Compliance Act (FATCA)-style agreement. In a decision that will mirror that already undertaken by Isle of Man authorities, it is proposed that Guernsey and the UK will agree the following: a framework to enhance tax information reporting in line with FATCA principles through an inter-governmental agreement (IGA) with the UK; an alternative reporting model for non-domiciled UK tax residents; a revised double tax agreement; and a disclosure facility.
In agreeing to a UK agreement in principle, Harwood stated: Guernsey is fully committed to combating tax evasion and the principle of automatic exchange. Our twin IGA approach to US/UK reporting will provide our industry with a very strong platform to compete on the world stage against weaker, less transparent and less compliant jurisdictions."
Guernsey does in fact already exchange information with the UK on an automatic basis regarding income earned by UK savers on their Guernsey bank deposits under the EU Savings Tax Directive (EUSTD). However, the EUSTD is easily circumvented, and the new IGAs between the Crown Dependencies and the UK are expected to plug these loopholes.
The first merchant bank was established in Guernsey in 1963 and according to the GFSC there are currently 32 licensed banks in the island with deposits of around GBP87bn. They represent a range of countries with concentrations of banks with head offices in the UK and Switzerland. Other banks are from Bahrain, Belgium, Bermuda, Canada, Cyprus, France, Germany, Netherlands and the USA among others.
Just over one quarter of deposits are in sterling, and most banks offer foreign currency deposits. The most recent growth in the deposit base of Guernsey banks has been in foreign currency. In fact, about 52% of all deposits held by Guernsey banks are US dollar deposits and the euro makes up about 13% of deposits.
The range of services offered by banks in Guernsey is quite diverse. Some provide retail banking services essential to the local community; others target the affluent expatriate market or offer private banking services to high net worth individuals seeking a holistic wealth management solution. Banks also support the other financial services businesses operating in Guernsey providing custody, foreign exchange and other banking services to the investment, fund administration, fiduciary and insurance sectors.
Bank deposits have been on the decline since the financial crisis. Total deposits held in Guernsey banks fell below the GBP100bn mark according to third quarter figures from the GFSC. These figures show a 6% decrease in deposits in sterling terms since June 2012, and a 15.1% fall year-on-year.
Total funds deposited with Guernsey banks at the end of September 2012 decreased by GBP6.2bn from the end of June 2012 level of GBP103.1bn, down to GBP96.9bn. Total assets and liabilities decreased by GBP7.7bn to GBP123.5bn representing a 5.9% decrease over the quarter and a 11.5% fall since September 2011. The lower figures reflected the effects both of volume and exchange rate factors, the Commission said.
However, the headline figures do not tell the whole story. Sterling strengthened against the US Dollar, Euro and the Swiss Franc, which had a negative effect on the level of deposits expressed in sterling, adding to the material decrease in the volume of deposits during the quarter. The value of holdings expressed in the underlying base currencies show that deposits in US Dollars increased by 5.1%; Euro deposits decreased by 23.2%; deposits in Swiss Francs decreased by 13.7%; and Sterling deposits fell by 3.4%. This led to some movement in the overall currency mix. The proportion of deposits in sterling increased to 25.1% while deposits in US Dollars increased to 51.7%. Euro deposits decreased to 14.9% and Swiss Franc deposits fell slightly to 3%.
No new banking licences were issued during the quarter but one was surrendered. The Bank of New York Mellon (CI) Limited surrendered its licence in July following a worldwide strategic review at group level. This was a small bank originally licensed as Mellon Bank (Channel Islands) Limited in 1999, which engaged principally in business with other parts of the Mellon Group.
Commenting on the statistics, Philip Marr, Director of Banking at the GFSC said: Global deleveraging continued to influence the Guernsey aggregate banking figures and total deposits and total assets and liabilities resumed their downward trend. Difficult economic conditions reduced interbank activity and measures to conserve capital by global banks are working together to produce further balance sheet contraction across a range of licensed banks.
According to Marr, the short term outlook is for more of the same and further erosion of the level of deposits.
The difficult economic environment has already generated several cases of rebalancing of books of business within the Crown Dependencies and we can expect a continuation of the transfer of business books among the Crown Dependency finance centres driven primarily by the goal of achieving economies of administration, he said.
The investment sector in Guernsey provides a broad range of services including stock broking, investment advice and management, promotion, fund management and administration, and custody of assets to an international clientele. There are close links with the City of London as well as institutions in the European Union, North America, Southern Africa and Asia. These activities, each of which requires a licence under the Protection of Investors (Bailiwick of Guernsey) Law 1987, are regulated by the GFSC.
Collective Investment Funds, both open and closed-end, have been an important feature of the investment sector for many years. All Guernsey domiciled funds have to be authorised by, or registered with, the Commission, and all must be administered by a Guernsey-licensed administrator; open-ended funds must also have a Guernsey-licensed custodian. In addition, the sector provides services such as administration to a wide range of investment funds domiciled in other jurisdictions. Promoters of Guernsey funds include leading institutions from over 55 financial centres.
Other investment firms in Guernsey provide independent advice, private client and institutional stock broking, and non-fund portfolio management.
Guernsey's funds industry expanded by GBP15bn (USD22.7bn) in 2012, according to GFSC data. The net asset value of funds under management and administration in Guernsey grew by GBP2.4bn (0.8%) in the final quarter of 2012, adding to growth of GBP13bn seen during the first nine months of the year to take the value of funds business in Guernsey to GBP276.8bn at the end of December 2012. This represents a year-on-year increase of GBP15.4bn (5.9%); growth of GBP19.4bn (7.5%) compared to December 2010 levels; and an increase of GBP92.6bn (50.3%) since the end of December 2009.
Fiona Le Poidevin of Guernsey Finance welcomed these figures, noting that: We have now enjoyed four consecutive quarters of growth since the beginning of 2012 which is very encouraging. It demonstrates confidence in Guernseys funds infrastructure and services at a time of changing economic conditions across the globe. These figures mean that we have entered 2013 in fantastic shape and we are keen to see this trend continue.
The numbers from the GFSC also show that the Guernsey closed-ended sector was valued at GBP131bn at the end of December - up GBP0.7bn (0.5%) during the final three months of 2012 and up GBP11.9bn (10%) compared to twelve months earlier. Guernsey domiciled open-ended funds reached a net asset value of GBP50.3bn at the end of December 2012, which was a decrease of GBP1.1bn (2.2%) during the quarter, and down GBP5bn (9%) year on year.
Non-Guernsey schemes, where some aspect of management, administration or custody is carried out in the island, grew by GBP2.9bn (3.1%) during the quarter to reach GBP95.5bn at the end of December 2012, which is GBP8.5bn (9.7%) higher than the value at the end of December 2011.
The coming of the EU Alternative Investment Fund Manager Directive (AIFMD) will mean a regulatory shake-up of the investment fund landscape across Europe.
The AIFMD entered into force on June 21, 2011, but EU member states have been given two years from this date to transpose the Directive into national law. The Directive aims to establish common requirements governing the authorization and supervision of alternative investment fund managers to provide a coherent approach to manage the related risks, and their impact, on investors and markets in the EU.
Guernsey plans to capitalize on the changes and its in but out EU status by offering, from July 2013, a dual AIFMD regime. This will allow funds targeting the EU to achieve compliance with the Directive, while also maintaining existing regulations for those investors and managers who are not obliged to follow the AIFMD route. At a basic level this will enable distribution of Guernsey products into both EU and non-EU countries via normal marketing routes, including EU national private placement regimes where they remain available. In addition Guernsey is examining the possibility of operating a Guernsey "opt in" AIFM regime in order to access (on a bilateral basis) EU member states that align their private placement rules with AIFMD. Guernsey will also engage in future consultations in relation to how the third country "passporting status" will operate from July 2015.
The first of two planned consultation papers on proposed amendments to the island's regulatory regime to ensure compliance with the requirements of the AIFMD was released on March 20, 2013.
According to the Commission, the consultation paper considers changes to Guernsey's regime to ensure that Guernsey-based alternative investment fund managers that are seeking access to the EU market fulfil transparency and reporting requirements detailed in Article 42 of the Directive.
The changes, the Commission said, will enable regulated entities flexibility to target the European Union, or any state in the European Economic Area in which the Directive has been implemented, through EU nations' private placement regimes.
The insurance industry in Guernsey has origins dating back to the 18th century with the islands first captive insurance company being incorporated in 1922. Since then, Guernsey has grown to become the leading captive domicile in Europe and the fourth largest captive domicile in the world.
Guernseys insurance business can be broadly divided into two types: international insurance business, comprising both captive and commercial insurance companies writing non-local insurance risks; and domestic insurance business, comprising domestic insurance companies writing local insurance risks, and insurance intermediaries advising on or arranging contracts of insurance from within Guernsey.
Insurance business conducted in or from within Guernsey has been subject to regulation by the GFSC since December 1986 when The Insurance Business (Guernsey) Law, 1986 came into effect. This law encompassed most aspects of insurance and, for the first time, required those carrying on insurance business to register with the Commission. The law also imposed registration requirements on those seeking to manage insurance business in Guernsey. In April 1998, an amendment was passed to impose similar registration requirements on insurance intermediaries.
In November 2002, the regulation of insurance business in Guernsey was further enhanced through the introduction of two new laws, namely The Insurance Business (Bailiwick of Guernsey) Law, 2002, covering insurers conducting insurance business in or from within Guernsey, and The Insurance Managers and Insurance Intermediaries (Bailiwick of Guernsey) Law, 2002, covering insurance managers and insurance intermediaries conducting business in or from within Guernsey. These laws superseded the earlier legislation.
Since 2002, a number of amendments and revisions have been made to these insurance laws and numerous supporting regulations, rules, codes and guidance have been introduced to keep pace with the ever-changing international insurance environment.
The number of licensed international insurers in Guernsey rose significantly during 2012, according to the GFSC. The GFSC licensed 97 new international insurers during 2012, bringing the total number of international insurers licensed in the island to 737, a net growth of 50 on December 2011 levels. At the end of December 2012, there were 242 limited companies, 68 Protected Cell Companies (PCCs), 404 PCC cells, five Incorporated Cell Companies (ICCs) and 18 ICC cells.
During the course of the year, four new licenses were granted to limited companies, three in respect of PCCs, 87 for PCC cells and three for ICC cells. A total of 47 licenses were surrendered, from 17 limited companies, three PCCs and 27 PCC cells.
A significant number of the licenses issued in 2012 relate to insurance products supporting mortgages being offered to purchasers of newly built homes in England, Scotland and Wales. They are backed by the respective governments in the UK and are managed by JLT in Guernsey. Heritage in Guernsey is also managing a scheme established for UK housing associations. These represent another development in the use of the Guernsey-pioneered cell company concept.
Also during 2012, Swiss ILS manager Solidum Partners AG established a number of Guernsey reinsurance structures to facilitate the world's first ever private catastrophe bond listing on any exchange worldwide. In addition, Guernsey became home to another world-first with the launch of the Risk Purpose Trust (RPT), a trust structure similar to a captive insurance entity in terms of its purpose, launched by Guernsey-based companies, Robus Group and Marlborough Trust.
In February 2013, Guernsey was crowned European captive domicile of the year at the UK Captive Services Awards 2013, where a number of Guernsey-based firms also picked up accolades. Guernsey scooped the headline award ahead of other shortlisted jurisdictions: Dublin, Gibraltar, Luxembourg and Malta.
Le Poidevin said the award was a great way for the islands captive insurance industry to begin 2013 after a successful 2012. I am delighted that Guernsey has received this award and it is just recognition of the significant developments which we have seen within Guernseys captive insurance sector during the past twelve months. Guernseys strong heritage as a captive insurance domicile means that we have built significant strength in depth and that was also recognized at the ceremony, not just through Guernsey as a jurisdiction winning its category but also the number of Guernsey-based firms that collected awards on the evening.
She added: Many of the Guernsey-based firms winning awards have been particularly innovative in their approach to meeting client needs during 2012. This is the continuation of a long-term trend within Guernseys captive insurance industry and is something we will be looking to build on further during 2013.
Updates to the Companies (Guernsey) Law that were approved in principle by Guernsey's parliament at the end of 2012 will, among other changes, make reporting requirements more stringent, but they will also enable cells to become incorporated.
Under the changes cells of PCCs will be able to convert into non-cellular companies, which will provide greater options for insurance managers when restructuring insurance portfolios. Guernsey pioneered the cell company concept when in 1997 it introduced the PCC, and figures from the GFSC for 2012 show that this continues to be the area experiencing the strongest growth.
The legislation is expected to be approved in 2013.
Trust management, particularly for wealthy UK individuals, was the island's traditional business. New tax laws have reduced the possibilities for UK citizens, but Guernsey's trust business has continued to grow based on a more international clientele.
There are approximately 200 licensed fiduciaries in Guernsey, and together these hold an estimated GBP200bn to GBP300bn worth of assets in trust. Licensed entities include subsidiaries of major European, North American and South African financial institutions, subsidiaries of international and Channel Islands accountancy and legal practices and owner-managed independent trust companies.
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.
Guernsey was one of the first centres in the world to establish a comprehensive system for the licensing and supervision of its trust and corporate services providers. This was introduced by The Regulation of Fiduciaries, Administration Businesses and Company Directors, etc. (Bailiwick of Guernsey) Law, 2000, which came into effect in April 2001.
Regulated fiduciary activities may only be carried on by way of business in or from the Bailiwick of Guernsey, or by a company incorporated in the Bailiwick, under a licence granted by the GFSC.
There are two categories of fiduciary licence: a full fiduciary licence can only be granted to a company or a partnership, and authorises all regulated fiduciary activities; a personal fiduciary licence can only be granted to an individual and authorises the holder to carry on a restricted range of fiduciary activities. Those include acting as a company director, as trustee (but not as a sole trustee), and as executor of a will or administrator of an estate.
On January 9, 2012, the Guernsey Registry began accepting applications for the formation of foundations in Guernsey, following the approval of a new law by the UK Privy Council.
A foundation is often seen as the civil law equivalent of a common law trust and legislation allowing for the formation of these structures in Guernsey is another sign of the jurisdictions willingness to tap an increasingly international wealth management market.
A foundation is an incorporated, self-owning, legal entity which, although having much in common with a trust, has a distinct legal personality, something that is more commonly associated with companies. A foundation has similar features to a trust in that it has a founder who is similar to a settlor, beneficiaries who have similar rights to those of a discretionary trust, and a foundation instrument and rules which are similar to a trust deed. Foundations are commonly used for wealth management, and residents of jurisdictions in the Middle and Far East are more familiar with foundations than with trusts, which tend not to exist in their legal systems.
Commenting on the new law, Le Poidevin observed: "It's extremely pleasing to see that Guernsey's foundations legislation has been approved and the law has now come into force. Commencement of the law allows our fiduciary professionals to consider the use of a foundation as well as a trust when adopting wealth structures for their clients. Foundations may be particularly attractive to those based in civil law jurisdictions in Europe and further afield in the emerging markets of China, Russia and Latin America where the foundation concept is more familiar."
"We've been hearing from a number of industry practitioners over the past few months that there has been a great deal of interest in the Guernsey foundation, she added. As well as clients looking to set up a foundation, much interest has come from clients who have foundations currently domiciled in other jurisdictions and are looking to migrate these to Guernsey."
"We believe Guernsey's expertise in servicing private clients means that we are especially well placed to administer complex structures due to the heritage we have in providing trust and corporate services as well as, of course, our reputation for being a well regulated and transparent international finance centre, she concluded.
An interesting new addition to Guernseys suite of offshore laws is its new image rights register, which went live in the Guernsey Registrys Intellectual Property Office on December 3, 2012.
The legislation positions Guernsey as the first jurisdiction to have a legislative framework to register an image, enabling effective management and control of the commercial use of a person's identity, and images associated with that person including distinctive characteristics such as signature, voice, mannerisms and gestures.
The legislation not only establishes image rights as a new and separate branch of intellectual property law, it will also provide clearly defined safeguards for celebrities and sports personalities looking to further protect and capitalize on their image.
The register enables the legal recognition of a "registered personality" (i.e. the exclusive rights to the images associated with or registered against the personality). Once registered, the image right, as an identifiable asset, can be placed within a Guernsey structure, adding flexibility to allow image rights income to be channelled into a wealth management structure such as a trust, or a partnership structure to overcome complex asset ownership arrangements.
A team from Carey Olsen, acting on behalf of corporate and branding specialist Lesley Everett of Walking TALL International Ltd., made the first ever successful application for the registration of a personality and associated image rights on the morning of December 3, 2012.
Reporting that strong interest was being shown in the new register, Le Poivedin said in mid-December that: "There has been considerable interest in the progression of these developments and it is particularly pleasing to see that this has now translated into what is the first ever registration of a personality and associated image rights. Demand is also evidenced by the number of on-island practitioners registering as image right agents and I am hearing from many of them that there are serious enquiries in the pipeline which will hopefully lead to further registrations."
According to Le Poidevin, more than 100 local advocates, financial service providers and intellectual property specialists have attended Intellectual Property Office training courses on the new legislation and associated infrastructure. The course also forms one part of the requirements for qualification as a registered image rights agent in Guernsey.
John Ogier, Guernsey Registrar of Intellectual Property and architect of the image rights legislation, said: The interest in the UK and internationally covers the wide fields of sports rights, the entertainment industries of music, arts and media, business leaders and the managers of the estates of deceased persons for succession planning and charitable works."
The legislation has been carefully drafted to balance the commercial interests for a strong right with the interests of protecting public expression and freedom of news reporting, he added. There are therefore specific provisions ensuring the continued right to news reporting together with public expressions of parody, satire and use of images in research, education, public administration and law enforcement. In addition, the legislation specifically makes the applications and the register available for viewing on the Internet. This transparency, as well as publicizing the protection of image rights will support the islands reputational interests."
ConclusionDespite attempts by the high-tax countries to stigmatize the world of offshore, especially in the context of the current debate about what constitutes acceptable and unacceptable tax avoidance, many international offshore financial centres are working hard to maintain their reputations as transparent and law abiding members of the international community. The world of offshore is also having to innovate and adapt to new economic realities, with their traditional markets in the West giving way to the emerging economies of Asia, Africa and South America. At the moment, Guernsey appears to be succeeding on both fronts.
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