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Private Trust Company (PTC) Structures In Guernsey – Trusts


This guide is a summary of the law and procedures relating to
private trust company (PTC) structures in Guernsey
– a popular trust structure used by high net worth
individuals wishing to establish and manage their own trust

This guide is a summary of the law and procedures relating to
private trust company (PTC) structures in Guernsey
– a popular trust structure used by high net worth
individuals wishing to establish and manage their own trust


A private trust company (PTC) is a trust
structure used by high net worth individuals wishing to establish
and manage their own trust company, usually with the assistance of
family members and trusted advisers.

A PTC is a privately owned company incorporated specifically to
act as trustee of one or more family trusts. Like any other
company, a PTC is run by its board of directors, who in the case of
a PTC make the trustee decisions. Whilst run by the board of
directors, PTCs (and the underlying trust for which they act as
trustee) are usually administered by a professional trustee who is
experienced at carrying out trust and corporate administration.


The following is a typical PTC structure. PTC structures are
very flexible and can be modified in a variety of ways to
accommodate the particular needs of a client.


Whilst the client could own the shares in the PTC directly it
would probably be undesirable for them to have any direct link with
the PTC’s ownership, whether for tax, disclosure or for a
variety of other reasons. Therefore, other vehicles such as a
purpose trust or a foundation are considered more appropriate, the
advantage being that the shares in the PTC are not directly
attached to the client. The above structure refers to a
“purpose trust” holding the shares in the company which
will act as trustee of the family trust(s). A purpose trust is a
particular type of trust which, unlike a conventional trust, can be
formed to hold assets for a purpose without conferring a benefit on
any person. Here the purpose would be to hold the shares in the
PTC. Please see our overviews “Trusts in Guernsey” and
“Foundations in Guernsey” for details on foundations, as
an alternative to purpose trusts, for holding the shares in a


The incorporation of a Guernsey PTC is the same as for any other
Guernsey company with an application being made to the Guernsey
by an authorised corporate service provider and
incorporation taking as little as two hours.

The PTC will be run by its board of directors and therefore
careful thought needs to be given to the choice of directors to
ensure that the PTC and ultimately the underlying trusts are run
properly whilst avoiding potential pitfalls regarding management
and control.

A PTC will only need to be licensed by the Guernsey regulator if
it receives income, a fee or other monetary consideration. Whilst
most PTCs do not charge for acting as trustee, they may in practice
receive income to meet various expenses such as
director/administrator fees etc. and in such cases an application
can be made to the local regulator for an exemption to

The PTC and the trusts for which it acts as trustee will often
be administered by a professional administrator (pursuant to an
administration agreement) as the PTC and family trusts will need to
be run properly with the assistance of a body who knows how to
administer trusts/companies in accordance with the local laws.

The name of the PTC should not include the words “trust
company” unless the regulator approves this.


Guernsey has in place economic substance legislation to address
the concerns of the EU Code of Conduct Group for Business Taxation
that certain Guernsey tax resident companies may be used to
artificially attract profits that are not commensurate with
economic activities and substantial economic presence in Guernsey.
The Income Tax (Substance Requirements)
(Implementation) Regulations, 2018

(Regulations), require Guernsey tax resident
companies carrying on specified activities in respect of accounting
periods beginning after 31 December 2018 (and every following
accounting period) to demonstrate that they have substantive
presence in Guernsey.

The relevant activities are: banking, insurance, fund
management, financing and leasing, shipping, intellectual property,
headquartering, distribution and service centres and holding
companies (although holding companies are treated separately under
the Regulations). The substance requirements vary for each key
activity to reflect the different needs of the companies

Essentially, such companies will have to demonstrate that they
each have substance in Guernsey by:

  • being directed and managed in Guernsey,

  • having adequate people, premises and expenditure in Guernsey

  • conducting core income generating activities in Guernsey.

Economic substance requirements that applied to companies now
extend to partnerships. The reason is to fully meet commitments the
States of Guernsey gave to the EU Code of Conduct Group (Business
Taxation) in 2018. However, foundations and trusts are still out of
scope. Although trustees who are themselves companies may fall
within the regime.



PTCs provide a means by which the client, or their family, can
retain a greater degree of control over the trust affairs without
compromising the validity of the family trusts. The client can
compose the board of directors with themself, family members and
trusted advisers who have a heightened knowledge of the
family’s business and financial affairs and are empathetic to
the needs of the beneficiaries. Careful thought needs to be given
to the composition of the board of the PTC and also who is to have
power to appoint and remove its directors.


Having a PTC as trustee of family trusts will avoid the need for
future changes of trusteeship. Instead, only the management
agreement between the PTC and the licensed administrator would need
to be terminated and a new agreement would need to be entered into
between the PTC and the new licensed administrator, with the old
licensed administrator’s PTC directors (if any) ceasing to be
on the board of the PTC.


Ownership of the structure can remain confidential when
structured with the use of, for example, a purpose trust.


Professional trustees are always aware of their liability and
the risk of being sued, not only by beneficiaries but also third
parties. As a result, professional trustees are reluctant to take
ownership of assets or participate in ventures where substantial
risks may be present. PTCs (due to the composition of the board)
can provide for riskier investments to be included in the


PTCs can make confidential philanthropic payments whilst
ensuring the person managing the structure understands their
thought process in providing for such causes.


A PTC is likely to be more flexible and quicker in dealing with
trust assets.


As with all good things there are potential pitfalls relating to
PTC structures which include the following:


As the residency of a trust normally depends upon where the
trust is administered and where the majority of trustees are
resident, it is important the PTC is not resident in an
unfavourable jurisdiction where it could be argued it is managed
and controlled and as a consequence the trusts are resident (with
adverse tax consequences). In addition to having the majority of
the directors in the jurisdiction where the PTC has its registered
office, the directors must be seen to be properly discharging their
duties, understanding what they are doing, meeting to discuss and
being aware of the company’s business.


To avoid the possibility that the structure is attacked as a
sham, there must be evidence that the settlor/client and the
trustee (the PTC) intended to set up a proper trust structure which
should be run as such. The use of a licensed administrator to carry
out the general administration of the PTC and underlying trusts
should help avoid such sham attack.


Directors of PTC’s, like any other directors, have a duty to
act in the best interests of the company and where they breach this
duty, the general rule is that the duties imposed upon them are
owed to the company and not the shareholders – thus the
company would have to action the directors. That said, there is the
possibility, although remote where no fraud or sham, that the
shareholders could action the directors by way of a “dog leg

PTC structures are bespoke vehicles which can provide many
benefits, although they are not for everyone. Careful consideration
should be given at the outset and professional advice sought.

PTCs can be set up and administered (according to local
legislation and regulation) in a number of jurisdictions including
the majority of offshore jurisdictions in which Appleby

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.


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