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IN162 - Advantages Offered Through Residence in: Guernsey; The Isle of Man; Switzerland

Guernsey, the Isle of Man and Switzerland each offer a number of attractive features for those considering relocation from another jurisdiction. As well as general quality of life, the tax implications of any move on both a commercial and personal basis should be carefully evaluated.

The Isle of Man and Guernsey both offer a zero rate of corporation tax for companies. The only exceptions to this are income derived from banking, income from land and property located on each respective island and, in the case of Guernsey, income from resident utility companies.

These attractive corporate rates of tax, combined with low rates of income tax, no capital gains tax and no inheritance tax, make Guernsey and the Isle of Man attractive places to live and work.

Switzerland is also a jurisdiction worth consideration, in particular for those who have substantial income and no desire or need to work in Switzerland. It is possible to be taxed on a lump sum basis rather than on a worldwide income basis.

Guernsey

Taxation of Individuals

Immigration legislation in Guernsey is similar to the UK.

The property market in Guernsey is divided into an open and local market. Individuals who are not from Guernsey, unless they have a licence, can only live in open market property, which is generally more expensive than local market property.

Individuals have a tax free allowance of £8,250. Income tax is levied on income in excess of that amount at a rate of 20%.

There is a tax cap on non-Guernsey source income of £250,000 (taxed at a rate of 20%). This means that there is no tax on non-Guernsey source income greater than £1,250,000.

The following taxes are NOT levied in Guernsey:
Taxation of Companies

Companies are taxed at a rate of 0%. Exceptions are income from banking which is taxed at 10%, income from Guernsey land and property, and income from resident utility companies, which are both taxed at a rate of 20%.

There is a withholding tax of 20% on dividends paid to Guernsey residents. If an investment company has net untaxed income, and Guernsey resident shareholders, income will be deemed to be distributed pro-rata in accordance with each individual’s percentage shareholding.

Assistance Available through Dixcart

Dixcart has an office in Guernsey and is experienced in helping individuals and organisations move to the Island. We can help with:
Isle of Man

Taxation of Individuals

Immigration legislation in the Isle of Man is also similar to the UK, although work permits are generally required for non-Manx workers.

There is no restriction on owning property in the Isle of Man.

Individuals have a tax free allowance of £8,850. There is then a 10% income tax rate which is levied on the next £10,500. Income in excess of this is taxed at a rate of 18%, subject to a tax cap of £100,000. This means that there is no tax on an annual income over £570,000.

The following taxes are NOT levied in the Isle of Man:
Taxation of Companies

Companies are taxed at a rate of 0%, with the exception of income from banking and income from Manx land and property, which are both taxed at 10%.

With the exception of publicly quoted companies and companies owned by non-residents of the Isle of Man, companies are subject to a distributable profit charge where they do not distribute at least 55% of their trading profit and 100% of their investment profit. This is charged at a rate of 18% on up to 55% of the trading profit and 18% on 100% of investment income profit not already subject to taxation.

Assistance Available through Dixcart

Dixcart Management (IOM) Limited specialises in assisting people moving to the Island and establishing a business there. This help includes:
Switzerland

For individuals who have no desire to work in Switzerland and do not intend to conduct any commercial activities there, Switzerland can prove a favourable location.

To qualify for the Swiss lump sum taxation regime, an individual must take up residence in Switzerland either for the first time or having lived abroad for a considerable period of time, and must not seek employment or undertake any commercial activities there.

For persons who are not Swiss Citizens it is necessary to get a residence permit. Given the agreement for free movement of persons between Switzerland and the European Union (EU), residence permits are easy to acquire for EU nationals. Non-EU citizens are subject to different criteria.

An application can then be made to be taxed on a lump sum basis. The amount of income charged to tax will be the equivalent of the individual’s living expenses. Normally, this would equate to taxable income of five times the rent payable on the property occupied by the individual, or five times the imputed rent in the case of a property owned by the individual.

Swiss tax is then paid on this figure. The precise tax liability will depend upon the canton and the area of residence within the particular canton. Rates range from 22% to 40%.

The advantage of this method of taxation is the substantially lower amount of income on which the individual is assessed.

Assistance Available through Dixcart

Dixcart has an office in Switzerland and can assist individuals with:
Summary and Additional Information

Guernsey, the Isle of Man and Switzerland each offer benefits for individuals seeking to move residence to a new location while remaining within the geographic sphere of Europe. At the current time this may be of particular relevance to a number of UK non domiciliary individuals.

Dixcart has offices in Guernsey, the Isle of Man and Switzerland and can offer very specific and practical expertise regarding the benefits of these jurisdictions.

Please speak to Alan Corlett in Guernsey, Simon Kelly in the Isle of Man or Christine Breitler in Switzerland or contact us.