A law change in Guernsey is aiming to keep the island at the forefront of best practice with international employee benefits.
The island’s government has approved a new tax exemption for international savings plans, also known as end of service gratuity schemes, where the beneficiaries are non-resident in the island and all income of the scheme is non-Guernsey source income.
The move will enable Guernsey to build on the island’s market-leading position in the regulated pensions sector. It is expected to be popular for large institutions who could set up savings plans in the island for an international workforce. A number of jurisdictions are now requiring employers to make payments to employees when their employment ends, and this kind of savings scheme has become popular.
Stephen Ainsworth, President of the Guernsey Association of Pension Providers, said: “This enables us to continue to provide international savings plans now on both a regulated and on a statutory tax-exempt basis, and shows we are at the forefront of international best practice.”
International savings plans, providing benefits on leaving employment, have been provided from Guernsey for many years, but with no statutory basis of tax exemption. The tax exemption has been discretionary until now. There is no minimum age restriction as to when benefits can be taken.
Dominic Wheatley, Chief Executive of Guernsey Finance, said: “Guernsey has a long track history as an international pensions provider and I am sure that this innovation, which follows the regulation of international pensions and gratuity schemes in the island in 2017, will be widely welcomed.”