The introduction of the Guernsey Foundations Law has provided clients with a foundation solution to use alongside, or instead of, a trust. It is a very useful structure for asset protection, wealth planning and dynastic planning. A Guernsey foundation is also useful for corporate entities looking to create an orphan structure where the assets of a particular entity can be held in a foundation, rather than being an asset on that company’s balance sheet.
Once registered, a Guernsey Foundation acquires its own separate legal status or personality, which is separate to its founder, council of members and beneficiaries. A Foundation has limited liability. It can own assets, contract obligations and be part of administrative or judicial processes and its capacity is not limited by anything in the Foundation Rules or the act of any person appointed under the Rules.
The purpose of the Foundation may be charitable, non-charitable or a mixture of both and may benefit a person or class of persons or be to carry out a specific purpose, or a mixture of both. The purpose must be reasonable, certain and possible and must not be unlawful, against public policy or immoral. A Foundation cannot directly engage in commercial trading not incidental to the attainment of its purpose.
A Foundation is treated as a body corporate for income tax purposes in Guernsey. Guernsey companies are subject to tax at 0% on profit in Guernsey, with the exception of income from banking and local property/land, which is taxed at 10%.
A Foundation must appoint a licensed Registered Agent in Guernsey unless the Council is a licensed corporate body or individual based in Guernsey. The Registered Agent must have a Guernsey business address and be licensed as a Guernsey fiduciary. The Foundation must notify the Registrar of changes to the Constitution within one month of those changes.
On submission of an application and accompanying documents, the Registrar can establish a Foundation within 24 hours. A Foundation must file an Annual Validation to the Registrar together with the prescribed fee within one month of the Annual Validation date. There is no requirement to file accounts with the Registrar, but a Foundation must keep accurate and up to date accounting records.
Download the Guernsey Foundation Information Sheet here