Guernsey trust taxation: what to know

Residency and what it changes

Your residence, not the trust’s address, decides which country taxes you and which tax authority may receive information about your accounts. Running the trust from another place does not replace it.

Wherever the trust sits, a settlor or beneficiary remains under the tax rules of the country they live in. Those rules may reach trust income, gains or distributions, depending on the facts.

We leave those rules to your adviser, because the result depends on your residence, domicile, assets and the drafting of the deed. Only a tax adviser who knows both systems can answer that part.

What we can offer your adviser is a clean paper trail: the deed, the trustee accounts, the asset report and a list of distributions.

Three separate questions help. Where is the trust run? That is Guernsey. Where does each person connected with the trust live? And where are the assets? Some countries tax assets inside their borders whoever owns them.

Each answer can point to a different tax authority. For that reason the trustee asks every settlor, beneficiary and controlling person for tax residence details, and renews them over time.

CRS reporting

Under the CRS, financial institutions gather tax residence details and report account information to their own tax authority, which passes it on to the authority in the account holder’s country of residence.

Guernsey takes part in automatic exchange of tax information under the CRS (source: States of Guernsey, Common reporting standard (CRS)).

Local filing rules and dates depend on where you are resident; your tax adviser confirms them for your case.

We request from each person connected with the trust whichever forms a reporting regime needs, and we check with the local partner which regimes apply to your trust.

What the trustee reports and when

Each settlor, beneficiary and person who controls the trust completes a self-certification form for the trustee, stating where that person is tax resident.

Whether the trust itself must report turns on its structure and its mode of operation. The trustee and the local partner put the answer for your case in writing.

If you consent, your tax adviser receives a copy of whatever was reported about you.

Behind each report sits a record: the self-certification forms, the date each arrived and the account information that went out. Should an authority ask a question later, those papers answer it.

Ask us at any time what was reported. When your adviser holds the same facts as we do, what you declare and what an authority receives are less likely to differ.

Reporting is not a tax charge. It is an exchange of information that lets each tax authority check what it is owed under its own rules.

Tell the trustee when your circumstances change. A move abroad, a new citizenship or a new tax identification number can alter what is reported about you, so we update the self-certification and keep the earlier one on file.

Your own tax position

Your own tax is a matter for your adviser, and the rules vary by country. Put these questions to them before you fund a trust:

• How does my country treat income and gains inside the trust?
• Are distributions to me, or to my family, taxed when they are paid?
• Do I owe tax or file a return when I transfer assets into the trust?
• Does any inheritance or gift tax rule apply to the assets I place in the trust?
• What must I file each year, and with which authority?

Take the draft deed and the structure chart when you meet your adviser, and settle any doubt before signing. Record the answers and file them with the deed, so the same facts feed each year’s return.

Sources and review dates

Sources and review dates are listed below.

The facts here carry their source and date, and nothing on this page is tax advice; your lawyer confirms how each applies to your case.

Return to the overview of Guernsey trusts or read the features the law allows. The common questions page covers practical points, and you can request a quote for Guernsey when you are ready.