The proposals from Guernsey’s policy and resources committee, and put forward in the island’s 2018 Budget, are designed to stimulate the open property market.
If accepted, the new rules would introduce a lower tax cap of £50,000 for three years for new residents, if they have paid a minimum of £50,000 in document duty – effectively those who have spent a little over £1.5m on an open market property.
Broad sales pitch
Advocate Martyn Baudains, who leads law firm Ogier’s Guernsey property and relocations team, said: “This is an interesting proposal that, if approved, would fulfil the dual objectives of adding to Guernsey’s offering for high net worth residents and reinvigorating the market for high-end open market real estate.
“The motivation for moving to Guernsey has been less and less based around tax arguments over the last 10 years, and more about the quality of life and availability of high-class property – the approach laid out in the Budget proposals does an effective job of keeping the island’s sales pitch as widely based as possible.”
Beyond tax contributions
According to the policy and resources committee, the move of high net worth individuals to Guernsey, bringing with them their personal wealth and entrepreneurial expertise, would have a beneficial impact on the economy of the island, beyond their individual tax contributions.
It is proposed that from 1 January 2018, the introduction of a lower tax cap of £50,000 for new residents of Guernsey who have paid a minimum of £50,000 in document duty on the purchase of a property on the open market register. On current document duty rates, this would require the purchase of a property with a minimum value of approximately £1.5m.
It is intended that an individual will be able to claim this cap, for the year they take up permanent residence and then three consecutive years, where their open market property purchase has taken place either within six months prior to, or six months after, their first arrival in Guernsey.
This cap would have the same conditions as currently apply to the income tax cap of £220,000. To qualify for this lower tax cap, an individual cannot have been resident in Guernsey at any time in the previous three years.
The proposals in the Guernsey Budget will be debated, amended and confirmed by the island’s legislature at the start of November.
Positive inward migration
In separate news, the Guernsey Registry, which is responsible for tracking corporate migrations both in and out of the island, has reported that 23 companies migrated to Guernsey during 3Q17. Just four companies migrated out, representing a net inward migration of 19 companies.
The latest figures build on the positive results of 2016 when there were 83 company migrations to Guernsey and only 26 migrations out – a net growth of 57.
Most companies migrating to Guernsey in Q3 came from Panama and the British Virgin Islands, but there were also migrations from the Bahamas, Gibraltar, Isle of Man, Liberia and Luxembourg.
Net migration of companies to Guernsey in 2017 stands at 36, as at the end of Q3.
