Essential guide to setting up a family office in Guernsey

Guernsey has long been established as a secure, safe and stable jurisdiction for wealth management, being able to provide a supportive global environment and eco-system for servicing private capital and wealth.

Ogier's Private Wealth team has already assisted many families in relocating their family office to Guernsey or establishing a family office in the island for the first time. This guide provides an overview of the key considerations and steps for setting up a family office in Guernsey, ensuring a seamless transition and operation.

Why Guernsey for a family office?

Family governance remains a key consideration for many people, with clients wanting a safe harbour for their assets in a reputable jurisdiction with certainty around asset protection.

There is little doubt that properly regulated jurisdictions such as Guernsey will be the ones that attract family offices as the global landscape continues to shift in favour of transparency. In times of political turbulence, Guernsey stands out as a safe harbour, offering political and economic stability, an independent judiciary and a strong abidance by international standards of transparency. This stability is a key factor for family offices in choosing Guernsey.

Professional Services

Guernsey's professional reputation is maintained by its service providers and their employees, as well as those in governmental policy, working to ensure Guernsey remains a desirable place to work with or obtain services from. The availability of these high-quality professional services, including investment, accounting, and legal expertise, is essential for the effective operation of a family office.

Setting up in Guernsey

Establishing a family office in Guernsey involves coordinating various local legal services, including finding premises, employment advice, and regulatory compliance.

In recent times many mandates have been connected to asset management, such that a fund structure might well be incorporated into the family office platform. Inevitably these structures will need funds and regulatory advice. Private wealth advisers may also advise on the holding structure for the family office, the form of which will often be driven by succession planning, control and tax.

The structure

A family office may take an almost unlimited range of legal forms such as:

• a conventional company limited by shares
• protected cell company (PCC)
• a limited partnership
• limited liability partnership
• a unit trust
• some other form of trust to a foundation or to some combination of these

There are multiple factors which might impact upon the choice of legal structure, but some of the principal ones we see include the following:

• The purpose of the family office: If it is directed at only specific purposes, certain structures may not be suitable. For example, where the family want to be able to make investment decisions, a fully discretionary trust may not be the appropriate investment vehicle. But, a trust where the investment powers are reserved to a family investment committee might be.

• Simplicity: As a general rule it is usually best to adopt the simplest possible structure consistent with achieving the desired purpose

• Tax: The onshore tax position of family members may restrict what structures may be available, especially where family governance will involve family members in decision making

• Regulation: The structure and activities of the family office and its key individuals may need to be regulated as a financial services business and / or under the anti-money laundering regime or may benefit from an exemption from regulation

Licensing and regulatory considerations

Where the intention is for a regulated trust / company service provider (CSP) in Guernsey to act as host for the family office structure and there is no intention for the family office to employ its own staff or establish a real presence in Guernsey, then the structure will generally be exempt from the registration requirements under the Regulation of Fiduciaries, Administration Businesses and Company Directors, etc (Bailiwick of Guernsey) Law, 2000. This is on the basis that the CSP will be regulated. In most cases, family office structures administered by a regulated CSP will involve the establishment of a private trust company or a foundation where the board or council (as the case may be) is comprised of a combination of family members, regulated professionals and other appropriately qualified advisors.

Where there is intended to be a real presence in Guernsey, and the family office is employing staff in the island, then it may be that the activities of the family office will be outside of the scope of regulation.  Specific advice should be taken in each case.

Opening offices and employing staff

Family offices must comply with local employment and discrimination laws when drafting employment contracts, handbooks, and policies and must obtain a business license before renting or owning commercial premises. This may involve making the relevant applications and adapting existing documents to meet Guernsey's standards.

The Population Management (Guernsey) Law, 2016 requires everyone who lives and/or works in Guernsey to hold a valid permit or certificate evidencing they lawfully reside and work in Guernsey.  Certain individuals who are not exempt from the visa requirement will also require a work visa (obtained through the UK Home Office) to be able to live and work in Guernsey.

For family offices looking to rent or buy commercial premises in the island, options range from serviced offices to high-quality commercial properties, and commercial agents are available to assist in this process.

Ogier's Private Wealth team is happy to advise on any relocation or immigration questions and the property team is on hand to assist with family offices who are looking to rent or buy commercial premises.

Open Market Residency

High-net-worth individuals relocating to Guernsey can take advantage of foreign and worldwide tax caps as well as the "Open Market Tax Cap". This is available to those who purchase an open market property. This requires specialised tax advice and planning.

Conclusion

Establishing a family office in Guernsey offers numerous advantages for wealth management, from tax efficiency and regulatory robustness to privacy and access to tailored expert advice. Ogier's aim is to provide clients with a comprehensive and seamless service, ensuring their family office thrives in Guernsey's conducive environment.