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Economy and Banking Sector of Guernsey

Guernsey
Location
Europe
Population  (2012)
65 345
EU Status
not part of the EU
Currency
GBP (Pound sterling)
Nominal GDP (2015)
2.4 bln GBP  (+0.02%)
Credit Ratings (as of Sep 2016)
-/-
Consolidated Banking Assets (2016)
119.72 bln GBP  (+17.48%)
Deposit Guarantee
50 000 GBP
Number of Banks
24

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.

List of Banks in Guernsey
Banks in the Channel Islands

National Currency

Pound Sterling (GBP)

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.

GDP

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%).

Real GDP Growth in Guernsey. Chart 1. Real GDP Growth in Guernsey. Source: Government of Guernsey.

Inflation Rate

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%).

Inflation Rate in Guernsey. Chart 2. Inflation Rate in Guernsey. Source: Government of Guernsey.

Unemployment Rate

Unemployment Rate (2016)
1.4 %  (2015: 1.3 %)

Credit Ratings (as of Sep 2016)

Fitch Moody's
- -

Withholding Tax

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 in Guernsey: 0.0 - 20.0%

Withholding tax rates applied on payments of interest and dividends in Guernsey are shown in Table 1.

Dividends Interest
Natural person, resident 20.0 %0.0 %
Natural person, non-resident 0.0 %0.0 %
Table 1. Withholding tax rates in Guernsey.

Double Taxation Agreements

Double Taxation Agreement (DTA) is an agreement between two or more countries for the avoidance of double taxation.

DTAs of Guernsey: 12 Signed Agreements

Guernsey signed DTAs which already came info force with the following jurisdictions (for agreements which came into force after 01 January 2013 the date of coming into force is given in brackets):

 Hong Kong (Dec 2013)
 Isle of Man (Jul 2013)
 Jersey (Jul 2013)
 Luxembourg (Aug 2014)
 Malta (Mar 2013)
 Mauritius (Jun 2014)
 Qatar (Jul 2013)
 Singapore (Nov 2013)
 United Kingdom

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 01 January 2013 of signing the agreement is given in brackets):

 Cyprus (Jul 2014)
 Monaco (Apr 2014)
 Seychelles (Jan 2014)

Information Exchange

There are 3 ways for jusrisdictions to exchange information on tax matters:

  • spontaneously;
  • on request;
  • automatically.

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.

Exchange on Request: 57 Signed Agreements

Guernsey signed TIEAs which already came info force with the following jurisdictions (for agreements which came into force after 01 January 2013 the date of coming into force is given in brackets):

 Argentina
 Australia
 Bahamas
 Bermuda (Apr 2014)
 Canada
 Cayman Islands
 China
 Czech Republic
 Denmark
 Faroe Islands
 Finland
 France
 Germany
 Gibraltar (Mar 2014)
 Greece (Mar 2014)
 Greenland
 Hungary (Mar 2014)
 Iceland
 India
 Ireland
 Japan (Aug 2013)
 Latvia (Oct 2013)
 Mexico
 Netherlands
 New Zealand
 Norway
 Poland
 Romania
 Saint Kitts and Nevis (Apr 2013)
 San Marino
 Seychelles
 Slovenia
 South Africa
 Sweden
 United Kingdom
 United States
 Uruguay (Jul 2014)

There are also several agreements between Guernsey and other jurisdictions which was signed but haven't yet come into force (for agreements signed after 01 January 2013 of signing the agreement is given in brackets):

 Austria (May 2014)
 Belgium (Apr 2014)
 Botswana (May 2013)
 Brazil (Feb 2013)
 British Virgin Islands (Apr 2013)
 Chile
 Costa Rica (Mar 2014)
 Indonesia
 Italy
 Lesotho (Jul 2013)
 Liechtenstein (Jun 2014)
 Lithuania (Jun 2013)
 Macau (Sep 2014)
 Montserrat (May 2014)
 Portugal
 Slovakia (Oct 2013)
 Swaziland (Aug 2013)
 Switzerland (Sep 2013)
 Turkey
 Turks and Caicos Islands (Jul 2014)

Automatic Exchange: Starts in September 2017

Guernsey signed the automatic information exchange agreement on 29 October 2014 and committed to start the automatic information exchange in September 2017.

Further Information

FATCA

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.

Further Information

Deposit Guarantee Scheme

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:

  • if the depositor is eligible within the terms of the deposit guarantee scheme;
  • if the depositor's bank is a participant in the deposit guarantee scheme;
  • if the depositor's type of deposit is covered by the deposit guarantee scheme.

All these details about deposit guarantee scheme in Guernsey are summarised in Table 2.

Scheme Participantsall credit institutions operating in Guernsey (including branches of foreign banks), branches of Guernsey's banks abroad
Eligible Depositorsnatural persons
Covered Accountsdeposits by a natural person for his own benefits, account held by a parent for the benefit of his/her child
Maximum Protected Amount50 000 GBP
Paid In CurrencyGBP

Table 2. Deposit guarantee scheme in Guernsey.

Further Information

Country Ceiling for Deposits

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
- Aaa (prime)

Foreign currency deposit ceiling for Guernsey is Aaa (prime).

Banking Supervision

Financial Services Commission

Banking Sector Structure

Number of Banks
24
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.

Consolidated banking assets in Guernsey. 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.

CategoryNumber of Banks
Banks11
Branches of foreign banks13

Table 3. Number of banks by category in Guernsey.