Guernsey: CRS Reporting In Guernsey – Exemptions For Pensions

Last Updated: 31 July 2017
Article by Kerrie Le Tissier
Most Read Contributor in Guernsey, September 2019

Collas Crill Senior Associate Kerrie Le Tissier discusses the introduction of the new Guernsey pensions regime and the criteria that every Guernsey pension and/or gratuity scheme has to meet to qualify for an exemption under the Common Reporting Standard.

The pensions industry makes up a significant part of the island's financial sector, with many experienced providers offering a broad range of products, from domestic occupational pension schemes and personal pension schemes to international pension schemes for non-residents.

What happened on 30 June 2017?

This was an important date for pension providers in Guernsey for two reasons. To begin with, a new regulatory and supervisory set of rules for pension and gratuity schemes was introduced and it was the first reporting deadline under the Organisation for Economic Co-operation and Development's Common Reporting Standard (CRS). This was by no means a coincidence; the two are closely linked – CRS offers certain exemptions for regulated pension and retirement products and, given that Guernsey pension and gratuity schemes are now regulated, they may qualify for an exemption. If a scheme qualifies for an exemption, it is not required to comply with the 'due diligence' and reporting requirements that CRS normally imposes on it. However, many providers do not realise that regulated schemes are not automatically exempted from reporting under CRS – a scheme's regulatory status is only one of a number of criteria that dictates whether a scheme qualifies for one of the exemptions.

The new pension and gratuity scheme rules

On 30 June, the Guernsey Financial Services Commission (GFSC) issued the Pension Licensees (Conduct of Business) & Domestic and International Pension Scheme and Gratuity Scheme Rules 2017. The rules apply to all Guernsey fiduciary licensees carrying out pension or gratuity scheme business and the schemes that they form, manage or administer. The introduction of the rules followed an amendment made the same day to the legislation regulating fiduciary licensees (the Regulation of Fiduciaries, Administration Businesses and Company Directors, etc. (Bailiwick of Guernsey) Law 2000 (as amended)) to extend the list of regulated activities covered by the legislation to include the formation, management or administration of pension schemes or gratuity schemes, and the provision of advice in relation to the formation, management or administration of such schemes.

Under the new regime, a fiduciary licensee who wishes to carry out pension or gratuity scheme business must register with the GFSC by 31 July this year. Having done so, he/it must comply with the rules (although a transitional period applies to give licensees the chance to update policies and procedures in line with the new regime). Pension and gratuity schemes formed, administered and managed by licensees must then themselves be registered with the GFSC and need to comply with the rules.

The new set of rules is an opportunity for practitioners to keep up to date with recognised best international practice and expectations, improve Guernsey's competitive position, protect consumers more thoroughly from sharp practice and their own inexperience and bring Guernsey pensions under the aegis of certain exemptions applicable to pension schemes under CRS as it applies to Guernsey.

Guernsey's CRS legislation

Guernsey has issued regulations to enshrine CRS in its law. The Income Tax (Approved International Agreements) (Implementation) (Common Reporting Standard) Regulations 2015, which were made under the Income Tax (Guernsey) Law 1975 (as amended), came into force in Guernsey on 1 December 2015.

The regulations apply to all reporting financial institutions (RFIs) in Guernsey and, subject to certain optional approaches taken locally in accordance with CRS, mirror the reporting requirements set out in CRS. Each RFI must, in respect of the calendar year of 2016 and every following calendar year, comply with the 'due diligence' requirements imposed by, and provide the information required by CRS as it applies in Guernsey, as set out in Schedule 2 to the regulations (General Reporting Requirements), to the Director of Income Tax in Guernsey.

Each RFI must report the details of each reportable person or entity listed as an account holder of a reportable account of that RFI.

Exemptions for pensions - not that simple

The timing of the introduction of the new Guernsey pensions regime was significant as it coincided with the first reporting deadline for the CRS in Guernsey. People expected that, by introducing a regulatory and supervisory regime for pension business and pension schemes in Guernsey, providers would be able to rely on an exemption from the CRS reporting requirements which the regulations make available to regulated pension schemes.

However, the relevant exemptions are not that simple and require detailed analysis to understand their reach and effect.

There are two ways in which pension and other retirement schemes may be exempt:

  • when the scheme is a non-reporting financial institution, which may apply to certain domestic and international occupational and personal pension schemes approved by the Director of Income Tax in Guernsey (which is a significant amount of the pension business in Guernsey); or
  • when the account in question is a so-called exempt account, which ought to be relevant to those schemes that have not sought "tax approval" in Guernsey but which, nonetheless, are formed, managed or administered by Guernsey licensees.

  Both types of exemption are subject to a number of criteria, all of which must be fulfilled in order for the exemption to apply.

Exemption 1: non-reporting financial institutions

An exemption may apply if the pension scheme is a financial institution itself. If a trust is a financial institution it is most likely to be an investment entity but it may be a custodial institution instead. A pension trust scheme may be an investment entity if its gross income comes mainly from investing, reinvesting or trading in financial assets and it is managed by another financial institution (e.g. if one or more of its trustees is a financial institution or the trustee has appointed a discretionary fund manager which is a financial institution in its own right).

Only RFIs are required to report information under the regulations and, rather obviously, non-reporting financial institutions cannot be counted as RFIs. Pension and retirement schemes regulated in Guernsey may be classified as non-reporting financial institutions if they meet the criteria set out in the rules for either a 'Broad Participation Retirement Fund' or a 'Narrow Participation Retirement Fund'. Helpfully, the Director of Income Tax in Guernsey has confirmed, by way of Bulletin 2017/5 which he issued in accordance with the regulations, that a scheme approved under the Income Tax Law that meets ALL of the relevant criteria and complies with any relevant OECD guidance need not be considered a RFI for the purposes of the CRS for the 2016 period and so will not be required to report information in accordance with the CRS.

The types of scheme that may be able to rely on this exemption are:

  • Local occupational pension schemes approved under section 150 Income Tax Law;
  • International occupational or personal pension schemes which have opted to seek approval under section 154A Income Tax Law; and
  • Retirement annuity contract schemes and retirement annuity trust schemes (including QNUPS) approved under section 157A Income Tax Law.

The criteria with which these types of approved scheme must comply in order to take advantage of the exemption are as follows.

Broad Participation Retirement Fund

A fund established to provide retirement, disability, or death benefits, or any combination thereof, to beneficiaries who are current or former employees (or persons designated by such employees) of one or more employers in consideration for services rendered, as long as the fund:

  • does not have a single beneficiary with a right to more than 5% of the fund's assets;
  • is subject to government regulation and provides information reporting to the tax authorities; and
  • satisfies at least one of the following requirements:

(a) the fund is generally exempt from tax on investment income, or taxation of such income is deferred or taxed at a reduced rate, due to its status as a retirement or pension plan; (b) the fund receives at least 50% of all its contributions (other than transfers of assets from other Broad Participation Retirement Funds, Narrow Participation Retirement Funds, pension funds of government entities, international organisations or central banks and retirement and pension accounts that are excluded accounts) from the sponsoring employers; (c) distributions or withdrawals from the fund are allowed only upon the occurrence of specified events related to retirement, disability, or death (except rollover distributions to other Broad Participation Retirement Funds, Narrow Participation Retirement Funds, pension funds of government entities, international organisations or central banks and retirement and pension accounts that are Excluded Accounts), or penalties apply to distributions or withdrawals made before such specified events; or (d) contributions (other than certain permitted make-up contributions) by employees to the fund are limited by reference to the earned income of the employee or may not exceed $50,000 annually, applying certain rules set out in the regulations for account aggregation and currency translation.

Narrow Participation Retirement Fund

A fund established to provide retirement, disability, or death benefits to beneficiaries that are current or former employees (or persons designated by such employees) of one or more employers in consideration for services rendered, provided that:

  • the fund has fewer than 50 participants;
  • the fund is sponsored by one or more employers that are not investment entities or passive NFEs;
  • the employee and employer contributions to the fund (other than transfers of assets from retirement and pension accounts that are excluded accounts) are limited by reference to the earned income and compensation of the employee, respectively;
  • participants that are not residents of the jurisdiction in which the fund is established are not entitled to more than 20% of the fund's assets;
  • the fund is subject to government regulation and provides information reporting to the tax authorities.

If any of the relevant non-reporting financial institution conditions are not met, the scheme will be a RFI and will need to conduct 'due diligence' and send off reports, as called for by the regulations for the reportable period of 2016.

Exemption 2: excluded accounts

The General Reporting Requirements only apply when an individual or an entity (i.e. a legal person or a legal arrangement, such as a corporation, partnership, trust, or foundation) holds a financial account with a financial institution. The definition of 'financial account' in the regulations expressly excludes any account that is an excluded account, the definition of which extends to certain retirement and pension accounts.

A retirement or pension account that satisfies all of the following requirements will be an excluded account.

  • The account is subject to regulation as a personal retirement account or is part of a registered or regulated retirement or pension plan for the provision of retirement or pension benefits (including disability or death benefits).
  • The account is 'tax-favoured' (i.e. contributions to the account that would otherwise be subject to tax are deductible or excluded from the gross income of the account holder or taxed at a reduced rate, or taxation of investment income from the account is deferred or taxed at a reduced rate).
  • Information reporting is required to the tax authorities with respect to the account.
  • Withdrawals are conditioned on reaching a specified retirement age, disability, or death, or penalties apply to withdrawals made before such specified events.
  • Either: (i) annual contributions are limited to $50,000 or less or (ii) there is a maximum lifetime contribution limit to the account of US$1 million or less, in each case applying the rules set out in the regulations for account aggregation and currency translation.

As there is no annual maximum contribution or lifetime contribution limit under the Income Tax Law, schemes approved under sections 150, 154A and 157A Income Tax Law will not be excluded accounts (and so would need to fulfil all the criteria for a non-reporting financial institution in order to be exempt).

The availability of exemptions for pension and retirement schemes is no doubt welcome news for scheme providers in Guernsey, who might otherwise have to report on (and give notice of reporting to) countless people. However, people will have to review their schemes on a case-by-case basis to see whether they still qualify for exemptions. They will have to apply the exemption criteria strictly and a scheme that meets some but not all of the criteria will not be exempt, so no scheme will be exempted solely because someone is regulating it.

An original version of this article was first published in Compliance Matters, July 2017.

For more information about Guernsey's finance industry please visit

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions