FAQs
General FAQs
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Should I run my business through a company or as a sole trader?
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Do I pay tax on dividends paid out of my company?
Yes Guernsey trading companies pay a 0% rate of tax on their trading profits but once they are paid out as dividends then the company is required to pay the net dividend to the shareholder and pay the 20% tax element over to the Revenue Service. This is done via a distribution reporter system which we can submit for you. You need to prepare dividend vouchers which are given to the shareholders and which they submit with their personal tax returns, along with an application for credit for tax paid.
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I am the sole Director and shareholder of a Guernsey company - can I pay my social security through my company?
No if you own 50% or more of the shares in a company that also employs you then you don't fall within the definition of an employed person for Social Security purposes. You must pay self-employed social security contributions which mean that they are paid out of your own money outside of the company.
You will also be assessed for social security contributions based on your earnings and share of the profits not just your salary. If the company does pay your social security then this will be treated as additional money taken out by you (as a dividend or as a qualifying loan) and is liable to tax as well.
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Do non resident shareholders pay tax on dividends?
No dividends paid from a Guernsey company to non-resident shareholders are paid gross with no tax withheld.
