Update on the 0/10 corporate tax regimes

Both Jersey and Guernsey have business tax regimes referred to as “0/10”, under which the general rate of tax on companies is 0%. 

In Jersey certain financial services companies are taxed at 10% and the profits from specified utility companies and from importation and supply of hydrocarbon oil are taxed at 20%. 

In Guernsey income derived from a banking business is taxable at 10%. A publicly regulated utility company is subject to tax at the rate of 20%.

In both Islands any income derived from the exploitation of property located in the Island is taxed at 20%.

The 0/10 regimes were introduced in response to the EU Code of Conduct working group’s review of harmful tax measures in the EU and dependent territories, which found that certain measures in the Crown Dependencies were harmful.  The introduction of 0/10 enabled the islands to abolish harmful tax measures without damaging their competitive position.

When 0/10 was introduced, both Jersey and Guernsey introduced anti avoidance measures to attribute company profits to local shareholders.  These shareholder attribution measures have now been reviewed by the Code Group and found not to be compliant with the Code of Conduct.  As a result, shareholder attribution has been abolished in Jersey and Guernsey have announced that it will abolish shareholder attribution with effect from 1 January 2013. 

Both Jersey and Guernsey have an exempt company regime for collective investment schemes.  Whilst collective investment schemes are subject to tax at 0%, the exempt company regime provides additional certainty that the tax neutrality of funds will be maintained.

Should you have any questions or concerns you wish to discuss, please use the contact details on this page to speak to one of our tax team leaders.