The use of companies, owned either beneficially by individuals or by a trust or foundation, can offer considerable advantages.
The criteria according to which companies are taxed varies according to the jurisdiction but may include:
- Place of incorporation
- Place of management and control
- Source of income
- Special regimes, such as exemption from taxation or the granting of tax credits in appropriate circumstances
Some jurisdictions may levy corporate taxation based on more than one factor, for example if a company is incorporated, or managed and controlled in the jurisdiction.
In some jurisdictions, controlled foreign company legislation attributes the profits of overseas subsidiaries to shareholders resident in that jurisdiction, be they parent companies or individual shareholders. However, the trend worldwide seems to be towards independent taxation of companies which have a real presence in another jurisdiction from where they are genuinely managed and controlled. Taxation of independently managed and controlled branches in other jurisdictions may also be levied on the same basis.
Companies have relocated certain functions to other jurisdictions in order to reduce their corporate tax liability by claiming the right for subsidiaries to be taxed independently in their country of residence.
A company, even if it is not incorporated in a jurisdiction, is frequently taxed in the jurisdiction in which it is managed and controlled. The ability to be able to demonstrate proper management and control in an appropriate jurisdiction is becoming ever more important and subject to increasing scrutiny.
Guernsey has much to offer as a jurisdiction in which to incorporate and/or manage and control companies, both established in Guernsey and elsewhere. Its zero standard rate of corporate taxation, in most circumstances, means that companies can be genuinely managed and controlled in the island and not be subject to Guernsey taxation. We have the experience to be able to operate companies undertaking a wide range of activities, if necessary sub-contracting work to independent advisers and outsourcing functions. We do not specialise in one particular field but have a general commercial awareness to ensure that businesses can be managed in a way that can assist clients in maximising opportunities that may be available. We are able to assist with the establishment of companies in Guernsey and elsewhere and provide effective management in Guernsey in order to provide legitimate advantages for our clients.