Dividends and debenture interest are not covered in the treaty between Guernsey and the UK. Interest paid from Guernsey to a UK resident is liable to local withholding tax subject to exemptions under the business profits article of the double tax agreement with the UK, e.g., for UK banks. Bank deposit interest arising to non residents is exempt by statute from taxation in Guernsey.
In certain cases Guernsey residents can claim credit for Guernsey tax against their UK tax liability by way of unilateral relief.
Where no bilateral agreement exists, Guernsey grants unilateral relief. Relief is available at the lesser of the other territory's effective rate or at three-quarters of the Guernsey effective rate. In these circumstances, with the current rate of withholding tax in many countries being 30%, the effective additional tax payable in Guernsey is slightly under 5%.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.