Guernsey - Special considerations for short-term assignments

Special considerations for short-term assignments

Taxation of international executives

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For the purposes of this publication, a short-term assignment is defined as an assignment that lasts for less than one year.

Residence rules

Are there special residence considerations for short-term assignments?

The terms of Guernsey’s various double tax agreements may apply to individuals on short-term assignments from the other contracting state, which allows for certain exemptions from Guernsey tax in certain circumstances.

In any other case, the normal taxation rules apply as above.

Payroll considerations

Are there special payroll considerations for short-term assignments?

The Employees Tax Instalment (ETI) scheme must be operated on the employee’s wages if the employing company is exercising functions in Guernsey, otherwise the ETI scheme does not apply.

The employee may be exempt from making Guernsey social security contributions due to a totalisation or similar agreement in the home jurisdiction.

Taxable income

What income will be taxed during short-term assignments?

If the assignment is short enough that the employee remains non-resident for Guernsey tax purposes, then he/she will be taxable on Guernsey-sourced income only. In the case of employment income, the element deemed to have its source in Guernsey is that which relates to his/her duties performed in Guernsey.

If the employee is deemed resident but not solely or  principally resident and the sole or main reason for being in Guernsey is employment, then the tax liability will be based on Guernsey sourced income plus any remittances to Guernsey of non Guernsey sourced income arising in the year. In the case of employment income, the element deemed to have its source in Guernsey is that which relates to his/her duties performed in Guernsey (so long as the majority of the duties are performed outside Guernsey).

Additional considerations

Are there any additional considerations that should be considered before initiating a short-term assignment in Guernsey?

The main considerations are detailed elsewhere in this text.

© 2016 KPMG Channel Islands Limited, a Jersey company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

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