Guernsey and the Isle of Man – Implementation of Substance Requirements


The Crown Dependencies (Guernsey, Isle of Man and Jersey) have introduced economic substance requirements, for companies incorporated, or resident for tax purposes, in each of these jurisdictions, effective for accounting periods starting on or after 1st January 2019.

This legislation has been designed to meet the high level of commitment made by the Crown Dependencies, in November 2017, to address the EU Code of Conduct Group’s concerns, that some companies tax resident in these Islands do not have sufficient ‘substance’ and benefit from preferential tax regimes.

  • Once implemented, these changes are designed to place the Crown Dependencies on the EU white list of cooperative jurisdictions and will avoid any possibility of future sanctions.

It is worth noting that the EU have identified 47 jurisdictions, in total, all of which are having to address substance requirements urgently.

Crown Dependencies – Working Together

The Crown Dependency Governments have “worked in close collaboration together” in preparing the respective legislation and guidance notes, with the intention that these are as closely aligned as possible. Representatives from the relevant industry sectors have been involved in the preparation of the legislation for each Island, to ensure that it will work in practice, as well as it fully meeting EU requirements.

Summary: Crown Dependency – Economic Substance Requirements

In brief, Economic Substance Requirements, are effective for accounting periods commencing on or after the 1st January 2019.  Any Crown Dependency company that is considered resident in the jurisdiction for tax purposes and is generating income from undertaking relevant activities, will need to prove substance.

Specific ‘relevant activities’ are defined as:

  • Banking;
  • Insurance;
  • Fund Management;
  • Headquarters;
  • Shipping [1];
  • Pure equity holding companies [2];
  • Distribution and service centre;
  • Finance and leasing;
  • ‘High risk’ intellectual property.

[1] Not including pleasure yachts

[2] This is a very narrowly defined activity and does not include most holding companies.

A company tax resident in one of the Crown Dependencies which undertakes one or more of these ‘relevant activities’ will have to prove the following:

  1. Directed and Managed

The company is directed and managed in the jurisdiction in relation to that activity:

  • There must be meetings of the Board of Directors in the jurisdiction, at adequate frequency, given the level of decision making required;
  • At these meetings, a majority of directors must be present in the jurisdiction;
  • Strategic decisions of the company must be made at these Board Meetings and the minutes should reflect these decisions;
  • All company records and minutes should be retained in the jurisdiction;
  • Members of the Board should have the necessary knowledge and expertise to discharge the duties of the Board.

2. Qualified Skilled Employees

The company has an adequate level of (qualified) employees in the jurisdiction, proportionate to the activities of the company.

3. Adequate Expenditure

An adequate level of annual expenditure is incurred in the jurisdiction, proportionate to the activities of the company.

4. Premises

The company has adequate physical offices and/or premises in the jurisdiction, from which to carry out the activities of the company.

5. Core Income Generating Activities

It conducts its core income generating activity in the jurisdiction; these are defined in the legislation for each specific ‘relevant activity’.

The additional information required from a company, to demonstrate that it meets the substance requirements, will form part of the company’s annual tax return in the appropriate Island. Failure to file returns will generate a fine.


Enforcement of the economic substance requirements will consist of a formal hierarchy of sanctions for non-compliant companies, with increasing severity, up to a maximum fine of £100,000.  Ultimately, for persistent non-compliance, an application would be made to strike off the company from the relevant Company Registry.

What Type of Companies Must Pay Particular Attention to Substance?

Companies that only have their registered office in or are incorporated outside (and controlled in), one of the Crown Dependencies must pay particular attention to these new rules.

How Can Dixcart Help?

Dixcart have been proactively encouraging clients to demonstrate real economic substance for several years. We have established extensive serviced office facilities (in excess of 20,000 square feet) in six locations around the world, including the Isle of Man and Guernsey.

Dixcart employ senior, professionally qualified staff, to support and direct  international functions for its clients. These professionals are competent to take responsibility for different roles, as appropriate; finance director, non-executive director, industry specialist, etc.


Dixcart perceive this as an opportunity for clients to demonstrate true tax transparency and legitimacy. These measures also encourage real economic activity and job creation, in the Crown Dependency jurisdictions.

Additional Information

Two flow charts, one for Guernsey and one for the Isle of Man, are appended.

They detail the respective steps to consider and define when substance requirements must be met. Links to the relevant Government websites containing comprehensive details regarding the appropriate legislation for each jurisdiction are also featured.

If you require additional information on this topic, please speak to Steven de Jersey: or to David Walsh:


Dixcart Trust Corporation Limited, Guernsey: Full Fiduciary Licence granted by the Guernsey Financial Services Commission. Guernsey registered company number: 6512.

Dixcart Management (IOM) Limited is licensed by the Isle of Man Financial Services Authority.

Guernsey Substance Requirements

8th November 2018

Isle Of Man Substance Requirements

Release Date: 6 November 2018


Dixcart Trust Corporation Limited, Guernsey: Full Fiduciary Licence granted by the Guernsey Financial Services Commission.

Guernsey registered company number: 6512.


 Dixcart Management (IOM) Limited is licensed by the Isle of Man Financial Services Authority.

Key Aspects – Economic Substance Requirements For Guernsey

1 Introduction

Like other offshore jurisdictions, Guernsey will be implementing new legislation introducing economic substance requirements for companies in Guernsey. This briefing note sets out key aspects of the Guernsey Government proposed legislation,  noting that further, more comprehensive guidance notes, will follow in due course.

The proposed legislation is relevant to all companies resident for tax purposes in Guernsey and will be effective for accounting periods commencing on or after 1 January 2019.  It is proposed that the Guernsey company tax return will be redesigned  as all tax resident companies will be required to provide additional information concerning their activities and income.

Please note that this briefing note should be read in conjunction with the proposed legislation and guidance notes, which can be found at:

2 Background

In 2016 the EU Council committed to coordinated policy efforts in the fight against tax fraud, evasion and the Code of Conduct Group (“COCG”) were instructed to undertake a screening process whereby jurisdictions, including the Crown Dependencies of Guernsey, Jersey and the Isle of Man, were assessed against three standards in respect of:

i)     tax transparency

ii)    fair taxation; and

iii)   compliance with anti– Base Erosion and Profit Shifting (“BEPS”) measures.

No issues were raised in respect of the Crown Dependencies’ standards of tax transparency and anti-BEPs compliance. The COCG, however, expressed concern that the Crown Dependencies did not have a “legal substance requirement for entities doing business in or through the jurisdiction”.

The COCG were concerned that this “increases the risk that profits registered in a jurisdiction are not commensurate with economic activities and substantial economic presence”.  These concerns were articulated in a letter to each of the Crown Dependencies in November 2017.

In response Guernsey, along with the other Crown Dependencies, made a commitment to address these concerns by the end of December 2018.   Accordingly, the Crown Dependency Governments have “worked in close collaboration together” in preparing the respective legislation and guidance notes with the intention of them being as closely aligned as possible.  Representatives from the relevant industry sectors have been involved in the preparation of these legislations to ensure that they can work in practice, as well as fully meeting the requirements of the EU.

On 5 November 2018, the draft Income Tax (Substance Requirements) (Guernsey)(Amendment) Ordinance, 2018 (the “Substance Requirements Law” or ”SRL”) was published by the Guernsey Government with a view to ensure that Guernsey addresses its commitment in relation to the lack of economic substance requirement for doing business in and through Guernsey.

This briefing note has been prepared to summarise the key features of what is proposed under the SRL.

3 High Level Principles

The proposed SRL has been designed to address concerns that companies could be used to artificially attract profits that are not commensurate with economic activities and substantial economic presence in Guernsey.  With this in mind the proposed legislation requires certain companies to demonstrate they have substance in the Island by:

  • being directed and managed in the Island;
  • conducting Core Income Generating Activities (CIGA) in the Island; and
  • having adequate people, premises and expenditure in the Island.

These substance requirements apply to a company resident for tax purposes in Guernsey for the following categories of geographically mobile financial and other service activities referred to as “relevant activities”, as identified by the OECD’s Forum on Harmful Tax Practices:

  • Banking
  • Insurance
  • Shipping
  • Fund Management (this does not include companies that are Collective Investment Vehicles)
  • Financing & leasing
  • Headquarters
  • Distribution and service centres
  • Pure Equity Holding Company; and
  • Intellectual Property (for which there are specific requirements in high risk scenarios)

Each relevant activity category is defined in the SRL for which further details on specific scope are given in Appendix 1.

It is understood that all tax resident companies will be required to provide more information in their tax returns to ensure the above activities can be identified. Tax returns will also be tailored to collect the information needed to monitor compliance with the substance requirements as detailed in “5 Reporting” below.

Exemption to the Substance Test

Please note the following circumstances, where a resident company carries out a relevant activity, would be considered out of scope:

a)    If in any accounting period it has no income generated from a relevant activity; or

b)    Where a company is not resident for tax purposes in Guernsey, even if incorporated in Guernsey. Under the current law, it will be dependent on whether that Guernsey company is claiming residency in another jurisdiction that Guernsey has a double tax agreement (DTA) with, and then depending on the facts of that company and the applicable DTA to confirm the actual residency status. Guernsey has announced that it is reviewing its corporate tax residence rules in light of the new SRL and further guidance is expected during 2019.

4 The Three Substance Tests

Once a Guernsey resident company has been identified as undertaking relevant activities, the SRL requires the company to satisfy the “economic substance test”.  This test is split into three parts as detailed below (remembering if no gross income is received in relation to the relevant activity, there is no requirement to meet these tests):

(i)    Test 1 – Directed & Managed

The requirement to be directed and managed in the Island (“the directed and managed test”) is a separate test to the case law “management and control” test used in determining the tax residence of a company.  The following areas must be considered in applying the directed and managed test:

  • Frequency of Board meetings – that an adequate number of board meetings are held having regard to the amount of decision-making required at that level. What constitutes an adequate number of meetings will be dependent on the relevant activities of the company.  However, it is generally expected that even for companies with a minimal level of activity, there will be at least one meeting per annum of its board of directors.
  • Meetings held in Guernsey – that there is a quorum of directors physically present in Guernsey. It is not necessary for all of those meetings to be held in the Island but it would be expected that the majority are.  Also, though the SRL refers to the “quorum” of directors being present in the Island, the Guernsey Tax Office have confirmed they would expect to see the majority of the board physically attending in the Island.
  • Minutes and records – that the associated minutes and records are kept and provide evidence that the board is a decision-taking body making the strategic decisions.
  • Knowledge and expertise of Board – that the board has the necessary knowledge and expertise to discharge their duties. In the case where there are corporate directors, the requirements will apply to the individual(s) (officers of the corporate director) actually performing the duties.
  • Records kept in Guernsey – all minutes and records are kept in Guernsey.

(ii)   Test 2 – Core Income Generating Activities (“CIGA”)

For each sector the proposed SRL provides a list of the core income generating activities (which are listed in Appendix 2), applicable to each relevant activity that a company operates in, would carry out.  The company will therefore need to demonstrate that these core activities are undertaken in Guernsey.

However, it is not necessary for the company to perform all of the CIGA listed, in order to demonstrate substance.  For example, a company that holds a patent does not have to carry on the CIGA of marketing, branding and distribution as well as the research and development.

The proposed legislation also does not prohibit a company from outsourcing some or all of its activity. Outsourcing, in this context, includes outsourcing, contracting or delegating to third parties (such as a Corporate Service Provider (CSP)) or group companies.  What the Guernsey company has to be able to demonstrate is that it has adequate supervision and control of the outsourced activities and, to meet the substance requirements, that those activities are undertaken in the Island.  Where a CIGA is outsourced the resources of the CSP in the Island will be taken into consideration when determining whether the people and premises test is met.  However, there must be no double counting if the services are provided to more than one company.  The company remains responsible for ensuring accurate information is reported on its return and this will include precise details of the resources employed by its CSP, for example based on the use of timesheets.

Note, where outsourced activity is not part of the CIGA this will not affect the company’s ability to meet the substance requirement (for example, back office functions such as IT support). In addition, the substance requirement does not preclude companies seeking expert professional advice or engaging the services of specialists in other jurisdictions.

The key point to note is that the income subject to tax in the Island must be commensurate to the CIGA undertaken in the Island.

(iii)  Test 3 – Adequate Resources

The company has to demonstrate that in relation to the level of relevant activity carried on in Guernsey that there is adequate:

(a) Employees – The Company has an adequate level of (qualified) employees in the jurisdiction proportionate to the activities of the company.

(b) Expenditure – An adequate level of annual expenditure is incurred in the jurisdiction proportionate to the activities of the company.

(c) Premises – Adequate physical offices and/or premises in the jurisdiction from which it can carry out the activities of the company.

The proposed legislation refers to the term “adequate”.  However, this term is not defined and therefore has its ordinary meaning.  The dictionary definition of “adequate” is: “Enough or satisfactory for a particular purpose”.

What is adequate for each company will be dependent on the particular facts of the company and its business activity.  A company will have to ensure it maintains and retains appropriate records to demonstrate the adequacy of the resources utilised and expenditures incurred.

5 Reporting

The SRL requires a Guernsey company to provide to the Guernsey Income Tax Office any information that is reasonably required to assist the Director of Income Tax in determining whether or not a resident company has met the economic substance test.  Although the legislation is currently silent on what type of information is required, industry advisors have indicated that this information will be collected through the company’s annual tax return and that the following are details that are likely to be requested:

  • Business activities;
  • Amount and type of gross income;
  • Amount and type of expenses and assets;
  • Premises;
  • Number of employees specifying the number of fulltime equivalent employees with the necessary qualifications.

6 Sanctions and International Reporting

The proposed legislation includes robust and dissuasive sanctions for failure to meet the substance requirements. The sanctions are progressive and include financial penalties (as detailed below), the possible request for an audit where continued non-compliance is identified, with the ultimate sanction leading to the striking off of the company from the Companies Register.

The competent authority will also spontaneously exchange relevant information with the EU Member State competent authority where the immediate parent company, ultimate parent company and/or ultimate beneficial owner is resident, if the substance requirement is failed.  In all high risk IP cases exchange of relevant information will automatically occur (see Appendix 1 “Intellectual Property” for further details).

The financial penalties in Guernsey for failing the economic substance test are:

i)    For first accounting period failure, a penalty not exceeding £10,000;

ii)   For its third accounting period failure, a penalty not exceeding £50,000; and

iii)  For its fourth accounting period failure, a penalty not exceeding £100,000.

7 Further Guidance 

The tax administrations from the Crown Dependencies will continue to work together to produce comprehensive guidance notes which will be published in the near future.  However, these will not possibly be able to cover every scenario and will not replace the need to take independent professional advice.

A useful substance requirements flowchart as produced in the Crown Dependencies guidance notes has been attached at Appendix 3.

8 Conclusion

Companies operating in relevant sector industries are now under pressure to ensure that they comply with the new legislation which will commence at the start of 2019.

This will have a significant affect upon many Guernsey businesses who have only a short amount of time to demonstrate to the authorities that they are compliant. The potential penalties of non-compliance may cause detrimental reputational risk, fines of up to £100,000 and could even cause a company to eventually be struck off.

  • Where does this leave us?

All companies must consider whether they fall within the relevant sectors, and where they do, will need to consider and asses their position.  If a company does not fall within a relevant sector, then there are no obligations falling upon them by the proposed SRL.

Many companies will easily be able to identify whether or not they fall within a relevant sector and companies managed by CSPs may need to assess whether they have the necessary substance.

  • What might change?

We are on the brink of Brexit and, to date, much of the discussions have taken place with the EU commission and the draft legislation has been reviewed by them; however, the COCG will only meet to discuss such matters in February 2019.

It therefore remains to be seen whether the COCG agree that the proposals go far enough. What is clear, is that this legislation is here to stay in some shape or form and therefore companies need to consider their position as soon as possible.

  • How can we help?

If you think that your business may be affected by the new legislation, it is important that you begin assessing and taking appropriate action now. Please contact the Dixcart office in Guernsey to discuss substance requirements in more detail:

Dixcart Trust Corporation Limited, Guernsey: Full Fiduciary Licence granted by the Guernsey Financial Services Commission. Guernsey registered company number: 6512.

Appendix 1

Relevant Activity Definitions

Each relevant activity category is defined as follows in the SRL for a company resident for tax purposes in Guernsey:


Means the carrying on of banking business as regulated by the Banking Supervision (Bailiwick of Guernsey) Law, 1994.


Means the undertaking of insurance business within the meaning and under the licence of the Insurance Business (Bailiwick of Guernsey) Law, 2002.


Is defined in the SRL as any vessel larger than 24 meters operating in international waters (i.e. not in the Bailiwick of Guernsey waters) for income, for the transport of passengers or cargo including the following activities:

  • The rental on a charter basis of the ship;
  • The sale of tickets or equivalent and the provision of services connected with such sales;
  • The use, maintenance or rental of containers (including trailers and other vehicles or equipment used for the transport of containers) used for the transport of goods or merchandise; and
  • The management of the crew of a ship.

Fund Management

Means the “management” within the meaning of the Protection of Investors (Bailiwick of Guernsey) Law, 1987 both for those companies that are licenced or registered under this law.

Finance and Leasing

Is defined as a company providing credit facilities of any kind for consideration to any person (a “customer”).  It includes the provision of credit by way of instalments for which a separate charge is made and disclosed to the customer in connection with:

  • The supply of goods by hire purchase;
  • Financial leasing (excluding land and interests in land); and
  • Conditional sale or credit sale.

Any activity falling within the definitions of banking, insurance or fund management do not constitute financing and leasing.

Headquarters’ Business

Means the provision by a Guernsey resident company to non-Guernsey resident intra group persons of the of any of the following services:

  • The provision of senior management;
  • The assumption or control of material risk for activities carried out by, or assets owned by, any of those group persons; and
  • The provision of substantive advice in relation to the assumption or control of risk for such activities or assets mentioned above.

Any activity of the Guernsey resident company falling within the definitions of banking, insurance or fund management do not constitute activity of headquarters’ business.

Distribution and Service Centres

Means a business of which the sole or main activity is:

  • The purchase or raw materials and finished products from other members of the same group which are non-resident in Guernsey and to re-sell them for a small percentage of profits; or
  • The provision of services to other members of the same group which are not Guernsey resident.

Any activity of the Guernsey resident company falling within the definitions of banking, insurance or fund management do not constitute activity of distribution and service centres.

Holding Company

Where it is a Guernsey resident company which broadly holds the majority shares in another entity; has as its primary function the acquisition and holding of shares or equitable interests in other companies; and which does not carry on any commercial activity.

Intellectual Property (IP)

Where a company receives income from IP, it will also have to consider if it is a “high risk IP company”, which is defined in the legislation.

There is a rebuttable presumption that a high risk IP company has failed the substance requirement as the risks of artificial profit shifting are considered to be greater.  As a result, the competent authority will exchange all of the information, provided by the company, with the relevant EU Member State competent authority where the immediate parent company, ultimate parent company and/or ultimate beneficial owner is resident.  Such exchange of information will be in accordance with the existing international tax exchange agreements.

To rebut the presumption and not incur further sanctions (see below), a high risk IP company will have to produce materials which will explain how the DEMPE (Development, enhancement, maintenance, protection and exploitation) functions have been under its control, and that this has involved people who are highly skilled and perform their core activities in the Island.  The high evidential threshold requires:

  • Detailed business plans which clearly lay out the commercial rationale for holding the Intellectual Property asset(s) in the Island;
  • Concrete evidence that the decision making is taking place in the Island, and not elsewhere; and
  • Information on the employees in Guernsey, their experience, contractual terms, their qualifications, and their length of service. Periodic decisions by non-resident directors or board members, or local staff passively holding intangible assets, cannot rebut the presumption.

Appendix 2

Core Income-Generating Activity (CIGA) Definitions

For the purposes of the Regulations “core income-generating activity” in relation to each relevant activity that is being undertaken in Guernsey has been defined as follows:


In relation to banking, includes:

  • raising funds;
  • managing risk including credit, currency and interest risk;
  • taking hedging positions;
  • providing loans, credit or other financial services to customers;
  • managing regulatory capital; and
  • preparing regulatory reports and returns.


In relation to insurance, includes:

  • predicting and calculating risk;
  • insuring or re-insuring against risk; and
  • providing client services,

Fund Management

In relation to fund management, includes:

  • taking decisions on the holding and selling of investments;
  • calculating risks and reserves;
  • taking decisions on currency or interest fluctuations and hedging positions; and
  • preparing relevant regulatory or other reports for governmental or regulatory authorities; and
  • investors;

Finance and Leasing

In relation to financing and leasing, includes:

  • agreeing funding terms;
  • identifying and acquiring assets to be leased (in the case of leasing);
  • setting the terms and duration of any financing or leasing;
  • monitoring and revising any agreements; and
  • managing any risks.


In relation to headquartering, includes:

  • taking relevant management decisions;
  • incurring expenditures on behalf of group entities; and
  • co-ordinating group activities.


In relation to shipping, includes:

  • managing crew (including hiring, paying and overseeing crew members);
  • hauling and maintaining ships;
  • overseeing and tracking deliveries;
  • determining what goods to order and when to deliver them; and
  • organising and overseeing voyages.

Distribution and Service Centres

In relation to distribution and service centres, includes:

  • transporting and storing goods, components and materials;
  • managing stocks;
  • taking orders; and
  • providing consulting or other administrative services.

Holding Company

All activities related to that business.

Intellectual Property Assets

In relation to intellectual property assets, includes:

  • research and development (rather than acquiring or outsourcing);
  • marketing, branding and distribution;
  • taking the strategic decisions and managing (as well as bearing) the principal risks relating to the development and subsequent exploitation of the intellectual property asset;
  • taking the strategic decisions and managing (as well as bearing) the principal risks relating to the third-party acquisition and subsequent exploitation of the intellectual property asset; and
  • carrying on the underlying trading activities through which the intellectual property asset is exploited and which lead to the generation of revenue from third parties.

Appendix 3

Substance Requirements Flow Chart




Dixcart Trust Corporation Limited, Guernsey: Full Fiduciary Licence granted by the Guernsey Financial Services Commission. Guernsey registered company number: 6512.

Guernsey – Why Is It a Centre of Fintech Excellence?


The current digital age brings with it new challenges and opportunities for the finance sector. As far back as 20th July 2015 the States of Guernsey released their report ‘A strategic vision for FinTech’ drafted by PwC and contributed to by more than 70 representatives of local industry and the FinTech sector including Dixcart Trust Corporation Limited.

FinTech, as defined by the European Commission, is the combination of innovative financial services and the availability of capital through the use of new (digital) technologies, such as crowdfunding.

Broadly speaking FinTech can be currently divided into four sectors;

  • payments and currencies (crypto-currencies, currency exchanges, mobile money and payment apps),
  • software (any new process or programme designed to improve back and middle office processes),
  • platforms (crowdfunding and peer to peer fund raising),
  • data/analytics (tech which gathers and analyses data to produce information to improve business or target customers more efficiently, often referred to as “big data”).

FinTech is making a significant impact on the financial services market. Whilst some of this is a natural evolution of the industry, the current rate of change and the level of new opportunities is substantial.

The global growth in FinTech has been rapid and the sector is predicted to continue this strong pattern of growth.


Guernsey has considerable strengths which make it attractive to the FinTech sector including:

  1. Established Trust and Credibility as an Existing International Finance Sector

Guernsey’s finance industry has successfully grown over five decades. Professionals have extensive experience, infrastructure is in place and there is accumulated intellectual capital and this has contributed to the Island becoming a leading international financial service centre, with a high reputation.

International business can be undertaken with confidence in Guernsey as the Island has been scrutinised and endorsed by the International Monetary Fund and the Financial Action Task Force.

  1. Ability to be Flexible and Agile with Laws and Regulations Providing Ideal ‘Test Bed’ Conditions

Legislative and fiscal independence allows the Island to respond quickly to the needs of business. The Guernsey Financial Services Commission promotes robust yet pragmatic regulation and is renowned for being approachable, accessible and open to new ideas.

Guernsey is politically and economically stable – with a high grade AA+ credit rating from Standard & Poor’s – and it has strong links to the UK and wider Europe.

The Island is therefore an ideal test bed for FinTech.

  1. No Capital Gains Tax

The absence of Capital Gains Tax in Guernsey is a substantial benefit as most entrepreneurs look to exit their start-up in three to five years.

This means that the investors and entrepreneurs can reinvest all of their gains in new projects. As most FinTech businesses do not make a great deal of profit in the early years, low taxes on earnings (another benefit for companies registered in Guernsey) are not, in this instance, such an incentive.

  1. No VAT on Capital Expenditure

There is no VAT in Guernsey and therefore VAT savings can be achieved on capital and certain operating expenditure, such as marketing costs.

The absence of VAT on capital expenditure equates to savings on initial setup costs, such as the purchase of servers located on Island. Equipment and software costs for a FinTech business are likely to be significant, increasing the savings that may be enjoyed.

  1. Access to Capital Including Public Listed Vehicles

Guernsey offers a wide breadth of financial structuring expertise to help maximise  revenue potential through a project’s lifecycle. Guernsey is, in particular, a leader in private equity investment funds and listings.

Listings are available through the Channel Islands Securities Exchange, as well as other exchanges.

Guernsey has established a prominent position for itself in providing access to international stock exchanges, particularly the London Stock Exchange. More Guernsey companies have had successful initial public offerings of non-UK entities, than from any other jurisdiction in the world.

  1. Data Sovereignty

Guernsey is a self-governing democracy, with legislative and fiscal independence from the UK and EU. It legislates for all of its internal affairs, including data protection.

The Island is recognised by the EU as having adequate data protection regulations. This enables businesses to freely move personal data between the EU and Guernsey.

Guernsey’s ‘interception of communications’ legislation is based on a judicial approval process which is favourable compared to other jurisdictions and has received widespread approval.

  1. Island Wide Cyber Protection

Guernsey has a resilient and secure data connectivity within the global network of subsea fibre cables. Six fibre cables connect Guernsey to the UK, France and onwards to the rest of the world.

As an Island, there is the potential ability to ‘ring-fence’ systems thereby reducing certain cyber threats, such as distributed denials of service (DDoS) attacks.

Guernsey’s telecoms providers supply data filtering services which recognise when a DDoS attack is happening, and identifies and blocks the flow of malicious traffic, while allowing through legitimate data.

  1. Progressive Company and Intellectual Property Legislation

The Island has developed leading intellectual property legislation which covers a number of areas that are particularly relevant to FinTech, these include;

  • Brand protection through trademarks and image rights,
  • Copyright, including Digital Rights Management,
  • Database rights, protecting the value created when analysing data,
  • Patent Re-registration, including ‘business method’ style patents.
  1. Lifestyle and Community

Guernsey is a vibrant yet relaxed place to live and work with high standards of health and education and a strong sense of community.

Guernsey has a broad-based financial services industry (including support services) and all of the Island’s businesses and key institutions are in close proximity to each other which means an opportunity for increased face-to-face interaction, in less time.

The Island’s location between Europe and the UK places it in a time zone between the US and the Far East. This makes Guernsey a convenient place to carry out business with many different countries.


Guernsey’s existing laws, regulations and expertise mean that the Island is already an attractive location for FinTech.

In the absence of Capital Gains Tax and VAT in Guernsey provide additional incentives to FinTech companies to locate there.

Established activity across the range of FinTech sectors includes; insurance, financial markets, financial modelling, payment service providers, wealth management, platform investors, peer to peer, private equity and insurance.

For further information regarding support for FinTech business in and from Guernsey please contact Bruce Watterson at the Dixcart office in Guernsey: or alternatively please speak to your usual Dixcart contact.

Dixcart Trust Corporation Limited, Guernsey: Full Fiduciary Licence granted by the Guernsey Financial Services Commission.


Guernsey registered company number: 6512.


An Opportunity for Organisations to Legally Produce Medicinal Cannabis in Malta


A new legislative initiative in Malta means that it is now possible to grow and process cannabis (marijuana) in Malta, as long as it is for medical use. This presents an opportunity for entrepreneurs and investors.

Due to its geographical position Malta is also conveniently placed, as a potential distribution hub for medical cannabis.

Entities need to apply to produce and/or process medicinal cannabis in Malta and must comply with the legal criteria as specified in ‘The Production of Cannabis for Medicinal Use Act 2019’.

The Law in Malta

No cultivation, importation or processing of cannabis, no production of any products intended for medicinal use and no trade in cannabis can be conducted in Malta, prior to obtaining the necessary approvals, authorisations, licences and, or permits as required by or under the applicable Maltese laws.

What Requirements Must the Entity Meet?

The applicant must prepare the following documentation and submit the items to Malta Enterprise (ME):

  • A Business Plan – in the form of an Income Statement, Balance Sheet and a Cash Flow for the first three years of operation, with appropriate supporting documentation and appendices;
  • Due Diligence – details to include the shareholding structure and information regarding the beneficial owner. The shareholding structure cannot be changed in the future, without prior approval by ME;
  • The experience of the shareholders must be detailed and this is regarded as of particular importance.

The applicant must then obtain a ‘Letter of Intent’ from Malta Enterprise (ME) and ensure full compliance with the provisions of the Production of Cannabis for Medicinal Use Act, and any international obligations, resulting from a treaty that Malta may from time to time be party to.

Following Receipt of the ‘Letter of Intent’

When the project is approved, ME will issue the ‘Letter of Intent’ and the organisation can start to liaise with the Malta Medicines Authority to obtain the relevant licence.

ME may allocate land to the organisation, in one of Malta’s Industrial Parks, if required.

Moving forward, the relevant organisations producing or processing the cannabis, must at all time fully comply with the regulations relating to the production of medical products, as specified in the Malta Medicines Act.

The manufacturing process in Malta, must generate the final product that can then be sold directly to pharmacies.

The export of any goods, which require further manufacture, is not permitted.

Relevant Research and Development should generally also take place in Malta.

Additional Information

Dixcart can provide advice to companies seeking to produce and/or process medicinal cannabis in Malta and can supply additional information regarding related corporate and residence issues.

For further information please contact the Dixcart office in Malta: or speak to your usual Dixcart contact.

Portugal 1

SIGI’ – A New Type Of Portuguese Real Estate Company and its Benefits


Recent interest from the international financial and investment community in Portuguese real estate has motivated the Portuguese Government to introduce a new investment vehicle, exclusively dedicated to real estate investment.

Introduced in February 2019, the ‘Sociedades de Investmento e Gestao Imobiliaria’, (‘SIGI’) introduces a number of features generally associated with Real Estate Investment Trusts.

The SIGI is a new type of real estate company designed to acquire and/or manage, commercial or residential, properties within the rental market.

The tax framework mirrors that of another investment vehicle, the ‘OIC – Organismos de Investimento Colectivo’, and the tax benefits relevant to the latter are also applicable to SIGI’s, and regulated by the Portuguese Company Code.

The Advantageous Tax Regime

A key advantage of an SIGI is its tax framework.

The goal is to attract small investors and to provide them with re-assurance that, as long as there are profits to be distributed, they will benefit from them. The Law therefore states, that 9 months following the end of the tax year, the SIGI should pay, as dividends:

  • 90% of the profit arising from; dividends, income generated by its own shares, or income generated by other shares or units (when the SIGI holds the shares of other SIGI’s, or units in an investment fund);
  • 75% of the profits generated by the direct real estate activity;
  • In addition, at least, 75% of the net profit resulting from the sale of assets under the management of the SIGI, must be reinvested. This reinvestment should be made in other assets, within a 3 year period.

Failure to comply with any of the above requirements will result in SIGI status being withdrawn, for a minimum of 3 years.

Corporate tax, applicable to the profits of the SIGI, is at a rate of 21%.

However, in calculating the net profit, the following sources of income are NOT included:

  • Capital gains;
  • Income arising from real estate (including rental income);
  • Income arising from capital.

These exemptions are not available, if the source of the income is a country considered to be a tax haven by Portugal.

In relation to withholding tax:

  • If the investor is an individual tax resident in Portugal, withholding tax at a rate of 28% is applicable, when dividends are paid;
  • If the investor is an individual who is not tax resident in Portugal, the withholding tax rate is 10%;
  • If the dividends are paid to a Portuguese company, withholding tax is 25%;
  • Where dividends are paid to a company, the participation exemption may be applicable, and, in that case, there will be no withholding tax.


An SIGI must comply with the following rules:

  1. Registered as a stock company (“Sociedades Anónimas”);
  2. Appoint an external auditor and an internal tax committee;
  3. Use a specified Objects Clause;
  4. Have a minimum share capital of €5,000,000, represented in ordinary shares (it is not possible to have different classes of shares);
  5. Comply with certain limits relating to debt and the composition of assets;
  6. Include reference to “SIGI” or “Sociedades de Investment e Gestao Imobiliaria” in their name;
  7. The shares must be available to trade on a stock market or on a Multilateral System in Portugal or another EU Member State (Euronext Access or Alternext, Portugal).
  8. To provide additional opportunities to small investors, at least 20% of the shares must be held by investors, each holding less than 2% of the voting rights.

All assets acquired by the SIGI must be retained for at least 3 years and the debt ratio (debt includes: shareholder debt excluding equity, and bank debt) cannot be greater than 60% of the total value of the company assets, at any time.

Land that is acquired for the purpose of construction needs to be designated as urban property or as independent units, within 3 years of the acquisition date.

OIC’s (Organismos de Investimento Colectivo) and stock companies can be converted into SIGI’s.

Additional Information

If you would like additional information regarding Portuguese SIGI’s and their potential benefits, please contact Antonio Pereira at the Dixcart office in Portugal: Alternatively please speak to your usual Dixcart contact. 

How Can Individuals Move to Switzerland and What Will Their Basis of Taxation be?


Many foreigners move to Switzerland for its high life quality, outdoor Swiss lifestyle, excellent working conditions and business opportunities.

A central location within Europe with a high standard of living, as well as connections to over 200 international locations via regular international flights, also make Switzerland an attractive location.

Many of the world’s largest multi-nationals and international organisations have their head-quarters in Switzerland.

Switzerland is not part of the EU but one of 26 countries making up the ‘Schengen’ area. Together with Iceland, Liechtenstein and Norway, Switzerland forms the European Free Trade Association (EFTA).

Switzerland is divided into 26 cantons, each currently with its own basis of taxation. As from January 2020 the corporate tax rate (combined federal and cantonal) for all companies in Geneva will be 13.99%


Foreigners are allowed to stay in Switzerland as tourists, without registration, for up to three months. 

After three months, anyone planning to stay in Switzerland must obtain a work and/or residence permit, and formally register with the Swiss authorities.

When applying for Swiss work and/or residence permits, different regulations apply to EU and EFTA nationals compared to other nationals.

EU/EFTA Nationals

EU/EFTA – Working 

EU/EFTA nationals enjoy priority access to the labour market.

Should an EU/EFTA citizen want to live and work in Switzerland, he/she can freely enter the country but will need a work permit.

The individual will need to find a job and the employer register the employment, before the individual actually starts work.

The procedure is made easier, if the new resident forms a Swiss company and is employed by it.

EU/EFTA Not working 

The process is relatively straightforward for EU/EFTA nationals wanting to live, but not work, in Switzerland.

The following conditions must be met:

  • They must have sufficient financial resources to live in Switzerland and ensure that they will not become dependent on Swiss welfare


  • Take out Swiss health and accident insurance OR
  • Students need to be admitted by the relevant educational institution, prior to entering Switzerland.
NON-EU/EFTA Nationals

Non-EU/EFTA – Working 

Third country nationals are allowed to enter the Swiss labour market if they are appropriately qualified, for example managers, specialists and those with higher educational qualifications.

The employer needs to apply to the Swiss authorities for a work visa, while the employee applies for an entry visa in his/her home country. The work visa will allow the individual to live and work in Switzerland.

The procedure is made easier, if the new resident forms a Swiss company and is employed by it. 

Non-EU/EFTA – Not working 

Non-EU/EFTA nationals, without gainful employment are divided into two categories:

  1. Older than 55;
  • Must apply for a Swiss residence permit through a Swiss consulate/embassy from their current country of residence.
  • Provide proof of adequate financial resources to support their life in Switzerland.
  • Take out Swiss health and accident insurance.
  • Demonstrate a close connection to Switzerland (for example: frequent trips, family members living in the country, past residency or ownership of real estate in Switzerland).
  • Abstain from gainful employment activity in Switzerland and abroad.
  1. Under 55;
  • A residence permit will be approved on the basis of “predominant cantonal interest”. This generally equates to paying tax on deemed (or actual) annual income, of between CHF 400,000 and CHF 1,000,000, and depends on a number of factors, including the specific canton in which the individual lives.


  • Standard taxation

Each canton sets its own tax rates and generally imposes the following taxes: income, net wealth, real estate, inheritance and gift tax. The specific tax rate varies by canton and is between 21% and 46%.

In Switzerland, the transfer of assets, on death, to a spouse, children and/or grandchildren is exempt from gift and inheritance tax,  in most cantons.

Capital gains are generally tax free, except in the case of real estate. The sale of company shares is one of the assets, that is exempt from capital gains tax.

  • Lump sum taxation

Lump sum taxation is a special tax status available to resident non-Swiss nationals without gainful employment in Switzerland.

The taxpayer’s lifestyle expenses are used as a tax base instead of his/her global income and wealth. This means that it is not necessary to report effective global earnings and assets.

Once the tax base has been determined and agreed with the tax authorities, it will be subject to the standard tax rate relevant in that particular canton.

It is possible for an individual to have gainful employment  outside Switzerland and to take advantage of Swiss lump-sum taxation. Activities relating to the administration of private assets in Switzerland can also be undertaken.

Third country nationals (non-EU/EFTA), are required to pay a higher lump-sum tax on the basis of “predominant cantonal interest”. This generally equates to paying tax on deemed (or actual) annual income, of between CHF 400,000 and CHF 1,000,000, and depends on a number of factors, including the specific canton in which the individual lives. 

Additional Information

If you would like additional information regarding moving to Switzerland, please contact Christine Breitler at the Dixcart office in Switzerland:

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