Taxation of international executives
For the purposes of this publication, a short-term assignment is defined as an assignment that lasts for less than 1 year.
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.
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 totalization or similar agreement in the home jurisdiction.
If the assignment is short enough that the employee remains non-resident for Guernsey tax purposes, then they 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 their 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 their duties performed in Guernsey (so long as the majority of the duties are performed outside Guernsey).
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.
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