Moving to Sark - Best Tax Structure for UK income

[Barney2201]

We have decided to move to the tiny island of Sark (Channel Island between UK & France). Looked at many places including a recent visit to Antigua and considered Monaco (but not in the multi-millionaire league)....
For those that don't know, Sark is a small island a 35 min boat ride away from Guernsey. It has no personal tax, minimal local taxes and no CFC rules.
To gain tax residency you have to stay on the island for 90 midnights.
It's remote but has good internet, Amazon delivers and 35 mins away the ferry arrvies into a port looking at Marks & Spencer (UK high street brands), so for '1st world living' it ticks a lot of boxes.
The flight from Guernsey to London is about 30mins.
We already live in Guernsey, which is great but still has quite a bit of personal and national insurance taxes (works out around 30% as a combined total) to pay (no corp tax), moving to Sark removes almost everything but a little property tax (around £2K per year).
So my question is....
We own a UK company which makes good money (not multi-millions) and a decent net (circa £500K per year). Currently we have a Guernsey company which owns our UK company as a gorup and profits are mainly accounted for in Guernsey.
Our Guernsey accountant has advised we keep the Guernsey structure, however Guernsey is a bit like Malta in that you need to have a local administrator and substance which all comes at a cost.... Plus I think the accountant like his rather high fees!
As we are tax resident of Sark and the company is owned solely by husband and wife team could we not just run our UK business as a normal UK company, pay ourselves good salaries (say £100K each per year) then give ourseleves a bonus at the end of the year leaving a bit in the company for HMRC as corp tax?
As employees of the UK company but not tax resident I don't beileve there would be any withholding taxes applied.
Would we come under any BEPS ruling (although I thought this was mainly for large businesses).
The alternative is to look for a tax duristriction to locate the 'off shore' part of the business like BVI and invoice a good element of the profit across.
If anyone is interested in looking at what Sark has to offer I have done substantial research, happy to share more info.

 

[Marzio]

If you are moving to Sark where there are no personal income taxes then why do you want to keep a LTD and pay corporate income tax when you could use a transparent entity like a LLP and achieve 0% tax?

 

[Barney2201]

Good point, but thought if a UK LLP which makes it's money in the UK and pays partners based offshore there was a 20% without holding tax?

Would love to be corrected....

 

[Martin Everson]

With a population of roughly 500 people on the island you will be on first name terms with everyone .

P.S Let us know how it goes.

 

[Marzio]

Good point, but thought if a UK LLP which makes it's money in the UK and pays partners based offshore there was a 20% without holding tax?

As far as i know a UK LLP run from abroad with no UK operations (selling to UK customers will not create a tax liability) will usually have no local tax liabilities. But please verify that with a GOOD accountat.

Or you could go with a Gibraltar LLP which offers the same tax transparent entity but it's a British Overseas Territory so you will bypass any possible claim that you have uk operations.

 

[Piano]

We have decided to move to the tiny island of Sark (Channel Island between UK & France). Looked at many places including a recent visit to Antigua and considered Monaco (but not in the multi-millionaire league)....
For those that don't know, Sark is a small island a 35 min boat ride away from Guernsey. It has no personal tax, minimal local taxes and no CFC rules.
To gain tax residency you have to stay on the island for 90 midnights.
It's remote but has good internet, Amazon delivers and 35 mins away the ferry arrvies into a port looking at Marks & Spencer (UK high street brands), so for '1st world living' it ticks a lot of boxes.
The flight from Guernsey to London is about 30mins.
We already live in Guernsey, which is great but still has quite a bit of personal and national insurance taxes (works out around 30% as a combined total) to pay (no corp tax), moving to Sark removes almost everything but a little property tax (around £2K per year).
So my question is....
We own a UK company which makes good money (not multi-millions) and a decent net (circa £500K per year). Currently we have a Guernsey company which owns our UK company as a gorup and profits are mainly accounted for in Guernsey.
Our Guernsey accountant has advised we keep the Guernsey structure, however Guernsey is a bit like Malta in that you need to have a local administrator and substance which all comes at a cost.... Plus I think the accountant like his rather high fees!
As we are tax resident of Sark and the company is owned solely by husband and wife team could we not just run our UK business as a normal UK company, pay ourselves good salaries (say £100K each per year) then give ourseleves a bonus at the end of the year leaving a bit in the company for HMRC as corp tax?
As employees of the UK company but not tax resident I don't beileve there would be any withholding taxes applied.
Would we come under any BEPS ruling (although I thought this was mainly for large businesses).
The alternative is to look for a tax duristriction to locate the 'off shore' part of the business like BVI and invoice a good element of the profit across.
If anyone is interested in looking at what Sark has to offer I have done substantial research, happy to share more info.

Is it as easy for EU nationals to gain tax residency there ?

 

[orangekangaroo]

I did read SARK has the most expensive electricity prices in the world.

 

[orangekangaroo]

Sark electricity among 'most expensive' in world

 

[bigladsmith]

Nothing a 4kW solar array and a Tesla powerwall wouldn't sort out for the Spring/Summer months....

 

[ernestdezoe]

Somebody has been spending too much time on the internet and not enough in the real world.

Despite the excel sheets and the personally crafted solutions that we all come up with thinking we are geniuses...there are reasons why these places like Sark, Transastria, Pitcarin Islands, Saint Helena, Nuaru are populated by basically nobody.

The authorities like OECD don't even bother pressuring them, because they know that the environmental factors provide all the pressure to make them basically irrelevant

As it has been said above Sark has a population of 500, it sits in the middle of the English Channel and doesn't have a proper hospital.....yeah.

 

[polonieth]

As it has been said above Sark has a population of 500, it sits in the middle of the English Channel and doesn't have a proper hospital.....yeah.

I agree Sark doesn't sound that appealing for most, but given how the NHS operates across the channel, I'm not sure not having a proper hospital is a bad thing usually when you get admitted into one of the No Hope Service establishments, you never come out.

 

[ashwane]

I wonder how @Barney2201 got on with this, how did Sark pan out for you? Settled in ok?

 

[Konstanz]

Will be interesting to hear how it goes for you in Sark
Please share your experiences

 

[Barney2201]

A bit of an update....

We are now living on the tiny island of Sark. Will we continue living here... No, but long enough to do the 90 midnights in 2022 and gain our tax residency for the year.

Sark is an interesting place, life is not hard, we live in a very nice property, it's English speaking, Amazon Prime works well, internet is ok 10-12mb down, and it's a 35min ferry ride back to Guernsey where there is a standard British high-street, good restaurants and the airport. You can move here without any real hassle on a British passport (unlike Europe), and yes it really is tax free (well just about). We recieved our tax bills this morning and as long as you don't have property which you can live in anywhere else in the world over £135K then your bill is £491 each. The tax form is made up of 6 questions on one side of A4, no online filing, you just fill it in and drop it into the head of tax, which like everything in Sark is just around the corner. So what's the downsides....

Travel over the winter months is tricky, until end of March we don't have the ferry service on a Sunday and there's only 2 sailings a day, every other day. I commute a lot back to London for work, currently it can take 3 days for me to go to London for one meeting (far from ideal). Secondly, we have two children aged 11 & 12, they are currently at online school (the school in Sark goes to 13 years old then students have to study in Guernsey), whilst our kids don't mind the online school they don't love it, we feel they are missing out on some elements of being in full-time school. Just for those that don't know, Sark has no roads only sand / gravel roads and only bicycles and tractors are allowed (you can only have a tractor if for commercial use). It's very quaint but no roads in winter means lots of mud, take the dog for a walk and it needs a bath every time... This year more of the restaurants have closed than usual for Jan - March, this means we have two pretty rubbish pubs, a shop and a post-office / general hardware store open. The supermarket (and mean that in the most basic of sense is the centre of the community), the upside is the supermarket stocks mainly Waitrose products, great but you pay a high price for just about everything, there is an abattoir on the island and dairy so meat and milk all good but again meat is top Doller. We have bought a bread maker as the bread supply is very inconsistent. When it comes to the locals they are a bit of a funny bunch... We have certainly not been met with open arms, I come from Yorkshire where everyone has the time of day (it's impossible to go into a village shop in Yorkshire without a half hour chat), here it's a case of the locals being happy to take your money but not much more, no chit chat, no 'how are you finding Sark' etc etc. I'm sure it's very obvious why we are here, rather than embracing the concept of moving to the island for tax but in return we bring our spending with it the locals seem to see it as an invasion of their island (many tourists have complained of this attitude in the summer so we are not alone). The weather is also not for everyone, having lived on Guernsey for 3 years we know the winters are wet and windy, Sark's the same but when everything turns to mud and there are no streetlights to add a little warmth to the winter gloom it does seem to make it feel much harder.

Property is another issues on the island, especially quality long term rentals. We are currently living in a very nice 7 bedroom property which is a winter let (£5K per month, so not cheap!), the island is very popular in the summer and the nicer properties can command £800+ per night, therefore the incentive to let long term is just not there. We looked for long term rentals and the only one we found which was suitable wanted us to sign a 3 year contract ( no way). Since Covid, there has been much new interest in the island, we have seen a number of new arrivals. There was a huge German contingent for a time (which is pretty ironic given the history of the place), whilst some of the German's still remain many have since moved away. It only takes a few families to decide to move here to change the face of the market. The one upside is it's pretty easy to buy property on the island, most property is leasehold but freeholds have just become available in the last two years, there is value around and plenty of renovation projects but building is expensive and slow as everything has to come from Guernsey.

Although Sark is not working for us it does have huge potential for people without children who are looking for an easy tax residency without the European Visa issues. It's possible to rent a very modest 1 bedroom flat or log cabin for around £9K per year, live here for 90 midnights and nowhere else for more than 183 and you are tax free. Whilst Dubai might be a bit more sexy, Sark is a hell of a lot closer to the UK, plus no one checks how many nights you spend in Sark vs Guernsey. We know of a number of individuals who have their family in Guernsey but 'apparently' live in Sark. They rent a flat, for a modest sum, make sure they are seen around the island enough to be known at the post office then spend most of their time in Guernsey. In summer the island is stunning (in a wild sort of way), there are a number of restaurants, a decent 4* hotel and lots more ferries back to Guernsey. If I was 'Sans kids, dog etc' I would just rent something simple for the summer then travel the rest of the year calling Sark home.

Hopefully this gives you all a good overview of life on Sark, it's very much down to the individual. Some will love it, some will hate it. If anyone wants any info on Sark or Guernsey just shout.

We are now looking to move to Portugal, appreciate NHR is a minefield but from a commute / quality of life it seems like the best deal.

 

[Sols]

Thanks for sharing, @Barney2201! Very interesting. Hope Portugal is more to your liking.

 

[Martin Everson]

I will echo that also. @Barney2201 Thanks for the feedback. Very good useful info you provided .

 

[Bertoson]

@Barney2201 Thanks for sharing, that was great! Would love to read your summary of life on Guernsey. For example, accommodation, shopping, general lifestyle, taxes etc

 

[cheeseall]

@Barney2201 would be interested in your experience regarding life in Guernsey - would also love a referral to your Guernsey accountant/ tax advisor

We're based in the UK and seriously considering relocating to Guernsey, and would be interested in exploring a UK trading co Guernsey holding co structure, which if I understand correctly, is/ was the structure through which you operate your business..

On another note, were you able to get a work permit to qualify for local market properties? Or did you simply take up residence in an open market property?

Any input would be much appreciated!

 

[Barney2201]

Hi Cheeseall, more than happy to share our Guernsey experience. If you would like to PM me I’m more than to set up a call to discuss.