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 as well as charitable and philanthropic purposes.

Once registered, a Guernsey foundation acquires its own separate legal status or personality that is separate to that of its founder, who provides the initial assets of the foundation (the endowment). These assets are held for the purposes set out in the foundation’s constitutive document, known as the ‘charter’. The charter must be filed with the Guernsey Registry.

A foundation is administered by a ‘council’, whose duties are solely to the foundation itself. Council members have no duties, fiduciary or other, to individuals who may benefit from the foundation. A second constitutive document – the ‘rules’ – prescribes the function of the council. This document is not filed with the Guernsey Registry.

A foundation may be established with or without beneficiaries, depending on its purpose. It has limited liability and can own assets, contract obligations and be part of administrative or judicial processes. Its capacity is not limited by anything in the foundation rules or the act of any person appointed under the rules.

The purpose of a foundation may be charitable, non-charitable or a mixture of both. It may benefit a person or class of persons or 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 that is 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 any changes to its 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.

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