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Guernsey slumps as leading offshore finance hub for expats
| Published: | 21 Jan at 6 PM |
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Just a year ago, the Channel Island of Guernsey was leading most of the rest of the offshore havens with its financial services for expats and offshore internet-based businesses.
During 2012, the island has witnessed the closure of expat-oriented banks, an end to QROPS for new investors and the closure of the Low Value Consignment Relief VAT loophole, resulting in the relocation of online companies such as Play.com. Guernsey was a popular location for QROPS providers and hosted a number of online sales businesses.
The move by Her Majesty’s Revenue and Customs which resulted in the closure of over 300 formerly approved QROPS schemes hit the Guernsey financial services sector hard, as did the closure of 16 of its offshore banks. A run on deposits held across the board followed, with a loss of 60 billion in investments.
Recently, Clydesdale Bank International, a favourite for expat savings handling, was forced to shut its doors to new business, with the projected loss of 19 jobs when it finally closes in 2014. Clydesdale’s closure will follow in the footsteps of HSBC International, Northern Rock and the Yorkshire Building Society.
The final nail in Guernsey’s coffin may be the USA’s FATCA Foreign Account Tax Compliance Act, which forces foreign finance houses to disclose taxpaying US citizens’ account details. Britain has already signed up, and is forming ‘son of FATCA’ which will compel banks in Crown Dependencies such as the Channel Islands to pass on British taxpayers’ banking details to HMRC.
Guernsey and Jersey have already stated neither will sign unless the agreement becomes a global regulation. Financial experts believe that compliance will be the death knell of the financial industry on the islands as they would be at a massive competitive disadvantage compared with offshore financial centres not under UK government control.
During 2012, the island has witnessed the closure of expat-oriented banks, an end to QROPS for new investors and the closure of the Low Value Consignment Relief VAT loophole, resulting in the relocation of online companies such as Play.com. Guernsey was a popular location for QROPS providers and hosted a number of online sales businesses.
The move by Her Majesty’s Revenue and Customs which resulted in the closure of over 300 formerly approved QROPS schemes hit the Guernsey financial services sector hard, as did the closure of 16 of its offshore banks. A run on deposits held across the board followed, with a loss of 60 billion in investments.
Recently, Clydesdale Bank International, a favourite for expat savings handling, was forced to shut its doors to new business, with the projected loss of 19 jobs when it finally closes in 2014. Clydesdale’s closure will follow in the footsteps of HSBC International, Northern Rock and the Yorkshire Building Society.
The final nail in Guernsey’s coffin may be the USA’s FATCA Foreign Account Tax Compliance Act, which forces foreign finance houses to disclose taxpaying US citizens’ account details. Britain has already signed up, and is forming ‘son of FATCA’ which will compel banks in Crown Dependencies such as the Channel Islands to pass on British taxpayers’ banking details to HMRC.
Guernsey and Jersey have already stated neither will sign unless the agreement becomes a global regulation. Financial experts believe that compliance will be the death knell of the financial industry on the islands as they would be at a massive competitive disadvantage compared with offshore financial centres not under UK government control.
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