Guernsey takes an official position on digital currencies
“The Commission has a policy of encouraging innovation. Virtual currencies are an area of innovation which the Commission continues to monitor closely while recognising that there are currently significant risks associated with them.
Guernsey, one of the Channel Islands that lie between England and France, has announced its position on digital currencies. The statement is sufficiently brief that I can quote it in full. Emphasis my own:
“The Commission has a policy of encouraging innovation. Virtual currencies are an area of innovation which the Commission continues to monitor closely while recognising that there are currently significant risks associated with them. In the light of those risks, the Commission will adopt a cautious approach and may well refuse applications to register financial services business where the use of virtual currency is involved. However, this approach will be regularly reviewed in the light of international developments.”
This position seems par for the course for many European countries — nothing too concrete other than a reservation of the right to not license Bitcoin businesses or any other cryptocurrency-focused money transmitter.
Guernsey is especially notable, as more than a third of its total income comes from financial services. As a UK crown dependency, British and Commonwealth citizens are free to travel to the Bailiwick of Guernsey, its official name. Guernsey also has a special relationship with the EU to allow freedom of trade and movement of goods.
In short, it is an offshore tax haven, and corporate taxes are normally 0%. Neither the UK nor the EU is particularly fond of Guernsey’s tax haven reputation, and both apply political pressure to get it “compliant.”
So, if you are a British or EU Bitcoin entrepreneur with plans to incorporate in a European tax haven, take note of Guernsey’s position and proceed with caution.