Guernsey is a British Crown dependency, situated in the English Channel. Guernsey is a "self-governing possession" of the British Crown and is considered internationally as a "territory for which the United Kingdom is responsible" rather than a sovereign state. Guernsey is not a part of the European Union, although it's within the European Union's customs area.
Financial services, including banking, fund management, and insurance, are the main contributors to the GDP of Guernsey.
Most of the banks in Guernsey are foreign-controlled banks representing a range of countries with majority of banks having their head offices in the United Kingdom and Switzerland. Banks operating in Guernsey provide quite diversified spectrum of solutions: retail banking services essential to the local community, expatriate deposits, private banking and wealth management. Guernsey's banks also provide custody, foreign exchange and other banking services to investment, fund administration, fiduciary and insurance sectors.
Guernsey's official currency is the Pound sterling (GBP): Guernsey has been in currency union with the United Kingdom since 1921. Guernsey pound is a local issue of banknotes and coins denominated in GBP rather than a separate currency.
|Nominal GDP (2015)||Real GDP Growth (2015)|
|2.4 bln GBP (+0.02%)||0.4 % (2014: 0.0 %)|
According to Government of Guernsey, nominal GDP of Guernsey in 2015 was 2.4 bln GBP.
Guernsey underperforms the European Union in terms of real GDP growth with the average annual differential coming to -0.4% over the past 4 years (2011 - 2015). In 2015 real GDP growth was 0.4% which was below the Euro Area average (1.6%) and below the European Union average (1.9%).
Chart 1. Real GDP Growth in Guernsey. Source: Government of Guernsey.
|CPI, Year Average (2016)|
|1.2 % (2015: 1.1 %)|
According to Government of Guernsey, inflation rate in Guernsey in 2016 expressed as annual percentages of average consumer prices was 1.2% which was above the Euro Area average (0.2%) and above the European Union average (0.3%).
Chart 2. Inflation Rate in Guernsey. Source: Government of Guernsey.
|Unemployment Rate (2016)|
|1.4 % (2015: 1.3 %)|
Withholding taxes are imposed at source of income and are often applied to dividends, interest, royalties, rent and similar payments. The rates of withholding tax are often reduced by double taxation agreements.
Withholding tax rates applied on payments of interest and dividends in Guernsey are shown in Table 1.
|Natural person, resident||20.0 %||0.0 %|
|Natural person, non-resident||0.0 %||0.0 %|
Double Taxation Agreement (DTA) is an agreement between two or more countries for the avoidance of double taxation.
Guernsey signed DTAs which already came info force with the following jurisdictions (for agreements which came into force after 1 January 2013 the date of coming into force is given in brackets):
There are also several agreements between Guernsey and other jurisdictions which were signed but haven't yet come into force (for agreements signed after after 1 January 2013 of signing the agreement is given in brackets):
There are 3 ways for jusrisdictions to exchange information on tax matters:
Spontaneous exchange of information is provision of information that is forseeably relevant to another party without a request being previously sent.
Tax Information Exchange Agreements (TIEAs) enable exchange of information on request relating to a specific tax investigation, either criminal or civil.
Automatic information exchange allows jurisdictions to exchange information automatically, without having a specific tax investigation.
Guernsey signed TIEAs which already came info force with the following jurisdictions (for agreements which came into force after 1 January 2013 the date of coming into force is given in brackets):
There are also several agreements between Guernsey and other jurisdictions which was signed but haven't yet come into force (for agreements signed after 1 January 2013 of signing the agreement is given in brackets):
Guernsey signed the automatic information exchange agreement on 29 October 2014 and committed to start the automatic information exchange in September 2017.
Guernsey has signed bilateral agreements with 51 jurisdictions to automatically receive information:
Guernsey has signed bilateral agreements with 59 jurisdictions to automatically send information:
Foreign Account Tax Compliance Act (FATCA) which became law in the United States in March 2010, focuses on reporting made by foreign financial institutions about financial accounts held by US taxpayers or foreign entities in which US taxpayers hold a substantial ownership interest. The FATCA-reporting is facilitated by Intergovernmental Agreements (IGAs).
|FATCA Status in Guernsey|
|IGA in effect since 13 December 2013, Model 1|
Guernsey has FATCA agreement with the U.S. in effect since 13 December 2013 (Intergovernmental Agreement Model 1). Financial institutions operating in Guernsey are required to identify U.S. taxpayers by January 1, 2017 and to report the information for 2017 and the subsequent years. The agreement is reciprocal: Guernsey's financial accounts hold in U.S. financial institutions will be reported to Guernsey's authorities.
|Maximum Protected Amount|
|50 000 GBP|
Deposit Guarantee Schemes compensate certain deposits held by depositors of a bank that becomes unable to meet its obligations.
From a depositor's point of view it is important to know:
All these details about deposit guarantee scheme in Guernsey are summarised in Table 2.
|Scheme Participants||all credit institutions operating in Guernsey (including branches of foreign banks), branches of Guernsey's banks abroad|
|Eligible Depositors||natural persons|
|Covered Accounts||deposits by a natural person for his own benefits, account held by a parent for the benefit of his/her child|
|Maximum Protected Amount||50 000 GBP|
|Paid In Currency||GBP|
Table 2. Deposit guarantee scheme in Guernsey.
Moody's country ceilings for deposits specify the highest rating that can be assigned to local- or foreign- currency denominated deposit obligations of a bank or other deposit taking institution domiciled within that country.
|Local Currency (Pound sterling)||Foreign Currency|
Foreign currency deposit ceiling for Guernsey is Aaa (prime).
Financial Services Commission
|Number of Banks|
|Consolidated Assets (2016)|
|119.72 bln GBP (+17.48%)|
Currently there are 24 credit institutions operating in Guernsey.
In 2016 consolidated banking assets in Guernsey were 119.72 bln GBP. The consolidated banking assets' evolution is shown at Chart 3 below.
Chart 3. Consolidated banking assets in Guernsey.
All the credit institutions operating in Guernsey can be classified into several categories. Table 3 summarises the number of banks in each category.
|Category||Number of Banks|
|Branches of foreign banks||13|