RESIDENCE IN ALDERNEY FOR INDIVIDUALS www.stpeterstrust.com
This information sheet is intended to supplement our brochure which contains certain background information concerning the Channel Islands and also information about our company, taxation in Guernsey and Guernsey trusts. Eligibility to reside in Alderney Any individual with a right of abode in the United Kingdom has the right to reside in Alderney. Unlike Jersey and Guernsey, Alderney does not impose any other restrictions with regard to the type of accommodation that can be occupied by individuals who may not be classed as local. Property prices in Alderney are extremely reasonable and there is a plentiful supply of dwellings for sale and rent. For persons who do not have a right of abode in the United Kingdom permission to reside in Guernsey has to be obtained from the Guernsey Border Agency. One way of applying for permission to reside in Guernsey is as an investor. In such cases assets of at least 1 million will have to be brought to Guernsey of which 750,000 will have to be invested in United Kingdom Government bonds or as share or loan capital in an active trading company. Another way of applying for permission is as a person intending to establish themselves in business. They would need to invest at least 200,000 in a business in the Bailiwick of Guernsey, have an income sufficient to maintain and accommodate themselves and any dependents without recourse to employment until the business provides them with an income, be actively involved full time in the business and satisfy certain other criteria. The rules are complex and specific advice may be obtained from the Immigration and Nationality division of the Guernsey Border Agency who would grant the relevant permission. 2
Taxation of individuals in Alderney For fiscal purposes Alderney is considered as part of Guernsey and therefore the individual and corporate tax regime is identical. The information that appears below is therefore applicable to both the Islands of Guernsey and Alderney and references in this section will be to Guernsey as it includes Alderney for tax purposes. The rate of taxation for individuals is 20% of assessable income. Various personal allowances are available and relief is also available for monies borrowed to purchase a principal private residence, subject to a limit of interest on 400,000. There is no higher rate of tax, capital gains tax, inheritance or other estate tax or wealth tax in Guernsey. Individuals who are solely or principally resident are subject to tax on their worldwide income, wherever arising or accruing, subject to a cap of 110,000 on the liability in respect of non-guernsey source income plus tax on Guernsey source income at 20%, or alternatively a cap of 220,000 on their worldwide income. Individuals who are not solely or principally resident are subject to tax on income arising or accruing in Guernsey together with other income remitted to Guernsey. Such an individual may elect to pay a flat rate tax charge in Guernsey of 27,500. (1) An individual shall be treated as being resident in Guernsey in any particular year of charge if:- (a) he spends 91 days or more in Guernsey in that year of charge, or (b) he spends 35 days or more in Guernsey in that year of charge and, during the four preceding years of charge, he has spent 365 days or more in Guernsey. (2) An individual shall be treated as being solely resident in Guernsey in any particular year of charge if:- (a) he is resident in Guernsey, within the meaning of (1) above, in that year of charge, and (b) he is not resident in any other place in that year of charge and, for the purposes of this paragraph, an individual shall be treated as being resident in any other place in any particular year of charge only if he spends 91 days or more in that place in that year of charge. (3) An individual shall be treated as being principally resident in Guernsey in any particular year of charge if:- (a) he spends 182 days or more in Guernsey in that year of charge, or (b) he spends 91 days or more in Guernsey in that year of charge and, during the four preceding years of charge, he has spent 730 days or more in Guernsey, or (c) he takes up permanent residence in Guernsey in that year of charge and, for the purposes of this paragraph, an individual shall be treated as taking up permanent residence in Guernsey in any particular years of charge if:- (i) he is resident in Guernsey, within the meaning of (1) above, in that year of charge, and (ii) he is solely or principally resident in Guernsey in the following year of charge. A tax year in Guernsey is a calendar year. In order to mitigate taxation on assets located in other jurisdictions it may be advisable for an individual to hold such assets through a limited company or insurance policy. By way of example, United Kingdom assets held by an individual, in excess of the nil rate band, would be subject to United Kingdom inheritance tax at rates of 40% on their death. Assets held through a limited company or insurance policy should not be subject to such tax. Guernsey has entered into full double taxation treaties with Hong Kong, Jersey, Luxembourg, Malta, Mauritius, Monaco, Qatar, Singapore, the Isle of Man and the United Kingdom. It has also signed a number of others which will be in force shortly and entered into several partial double taxation agreements. There are also unilateral provisions whereby relief may be given of up to three quarters of the Guernsey effective rate in respect of tax levied on the same income in another territory. Taxation of trusts The income of a trust with an Alderney/Guernsey resident settlor is likely to be assessable to tax in Guernsey unless the settlor is irrevocably excluded from benefit and there are no other Guernsey resident beneficiaries. 3
VAT, duties etc Alderney is outside the European Union and has no value added tax or equivalent. This facilitates easier trading internationally and reduces the administrative burden on businesses. Social insurance costs for employed people in Alderney total 12.5% with the employers share being 6.5% and employees 6% of annual deemed income with an upper deemed income limit, of 135,252. Self employed persons pay 10.5% on their income, and non employed persons 9.9% with the same upper limits. Living in Alderney There are a number of low tax areas in the world which offer individuals the opportunity to reside there. However, Guernsey has many other advantages, some of which are listed below: Temperate climate. Political stability. Well regulated and compliant with international standards. Low crime rate. West European time zone. Natural beauty. Very peaceful lifestyle Relatively unbureaucratic No VAT or a general Goods & Sales Tax Consider some of the Western European alternatives Jersey is far more restrictive with regard to the granting of permission to live there. The Isle of Man has a harsher climate and is more remote. It also has value added tax. Gibraltar is very small, overpopulated and politically less stable. Monte Carlo is very expensive. Switzerland taxes some individuals on a forfait or fixed sum basis but certain conditions have to be met. There are many other jurisdictions throughout the world and no two individual s needs are the same. However, Alderney has much to offer and many individuals who have settled there would not now wish to live anywhere else. How can we help? St Peters Trust Company Limited has been established in Guernsey for over thirty five years. In 2013 we purchased the fiduciary business of a long established Alderney company, Century Trustees Limited. We are in a position to assist individuals in establishing residency in Alderney and in conjunction with appropriate professionals, can offer the following services. Assistance in applying for permission to reside in Alderney (if required). Assistance in purchasing or renting residential accommodation. Incorporation of companies and establishment of insurance policies and trusts to mitigate tax liabilities. Assistance in dealing with all the relevant authorities when arriving in Alderney (Income Tax, Social Insurance etc.). General representation and dealing with an individual s affairs as and when required. Family office services. 4
St Peters Trust Company Limited PO Box 132, Quay House South Esplanade, St Peter Port Guernsey GY1 4EJ T +44 (0)1481 723674 F +44 (0)1481 711541 info@stpeterstrust.com The information contained in this publication is intended for the use by the prospective and existing clients of St Peters Trust Company Limited and its subsidiaries only. This publication is only intended to give a brief summary and general overview of its subject matter. It is not intended to be, nor does it constitute, professional advice and should not be relied upon as doing so. No responsibility or liability is for the accuracy of the information contained in this publication and neither St Peters Trust Company Limited, nor its subsidiaries, accepts any responsibility towards any person acting in reliance upon such information. The distribution of information contained in this publication may be restricted in certain countries by law or regulation and, accordingly, persons who access it are required to inform themselves of and comply with any such restrictions that might apply. Further, it does not take account of the effect of legislation in the territories in which a prospective or existing client may be resident or otherwise liable to fiscal regulations, exchange controls or other legal requirements. Specific advice should be sought in any particular case from a professional adviser. If you would like more information in relation to the matters covered in this publication, please contact us on +44 (0) 1481 723 674 or by email at info@stpeterstrust.com www.stpeterstrust.com