Guernsey: Offshore Legal and Tax Regimes
Taxation of Foreign Employees of Offshore Operations
This section refers to the taxation of foreign employees of non-resident operations and International Business Companies; see Domestic Personal Taxation for the general principles of individual taxation in Guernsey, which also apply to the resident employees of non-resident entities. There is in fact no distinction between the employees of resident or non-resident operations. It is a question of individual status. Most types of compensation and benefit paid to employees are taxable; there are no special privileges or exemptions for expatriate workers.
An individual is resident in Guernsey if he is on the island for a total of 182 days in the year of charge (the calendar year), or if he is on the island for a total of 182 days in the year to 31st July in the year of charge; and the use or possession of a dwelling-place usually leads to residence (the rules are complex). Resident means solely or principally resident. It is possible to be 'resident but not solely or principally resident' (essentially by not having a dwelling-place, but it's complicated); such an individual will pay Guernsey income tax on income sourced from or received in Guernsey (with exemptions for some sorts of local dividend, interest or royalty income).
Non-residents are liable to pay Guernsey income tax only in respect of income arising in Guernsey or from Guernsey sources (again, with exemptions for some sorts of local dividend, interest or royalty income).
In August 2004, proposals were offered in a States report seeking to amend the current legislation which determines residence for tax purposes. The reason for seeking the change is that the present rules are complex and not easily understood. Although for the majority of the population the changes will have no effect on their tax bills, the rentier sector may be affected. For this reason the accountancy profession was consulted. The simplification should lead to a reduction in the need for correspondence with the Tax Office on residence matters.