7th January 2020

Guernsey Tax – Distribution Rules

Guernsey income tax laws cover distributions from companies to the shareholders both by was of dividends and loans.

Dividends

All dividends paid by Guernsey limited companies to local shareholders are treated as being paid net of 20% tax. On a quarterly basis the company must submit a return to the revenue service and remit the withheld tax.

Shareholder Loans

The law also classifies loans to shareholders as distributions. Again, all loans paid are treated under tax law as being paid net of tax. As part of the distribution return submitted quarterly the loan amount is included and the necessary withheld tax is remitted.

If you repay the loan to the company within 6 years then the company is entitled to claim a repayment of that tax. In accordance with section 66B, a claim must be made within 15 days of the reporting date for the calendar quarter in which the loan or part thereof is repaid. If a qualifying loan is not repaid in whole or in part within 6 years of being made, the company is deemed to have written off the amount of the loan not repaid.

Compliance

When companies make distributions the necessary dividend documents must be prepared for the shareholders, and the necessary quarterly returns and remittances must be made to the Revenue Service. We can assist in this, and will ensure all clients comply with distribution reporting requirements.

The Information on this website is intended for guidance only. It is based upon our understanding of current legislation and is correct at the time of going to press. No liability is accepted by Evans Bond Limited for actions taken in reliance upon the information given and it is recommended that appropriate professional advice should be taken.