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Guernsey trusts and U.S. reporting rules

Guernsey financial institutions report domestic FATCA and CRS information through the Revenue Service's IGOR system, and IRS reporting requirements apply to foreign trusts. Trust residence and trust income tax rules are separate questions.

Guernsey reporting through IGOR

Guernsey financial institutions report FATCA and Common Reporting Standard information domestically through the Revenue Service's IGOR system. Separate Guernsey rules govern a trustee's tax residence, the taxation of trust income by source and the filing of a Guernsey trust income tax return.[1]

The FATCA and CRS schemas support the international exchange of information, while IGOR provides domestic reporting procedures. IGOR forwards details about accounts, account holders and organizations to the destination country.[1]

A submitted XML message must pass validation against the relevant FATCA or CRS schema. Some fields IGOR ignores may still be required by that schema. A reporting institution authenticates a FATCA report using a GIIN associated with its authorized institutions; CRS reporting can also use the registered institution name when no GIIN is provided.[1]

  • For FATCA, each ReportingFI must include one U.S.-issued GIIN that is authorized for the organization.[1]
  • For CRS, IGOR can authenticate the ReportingFI by its registered name when a GIIN is absent.[1]
  • The ReportingPeriod field is required and helps IGOR determine when to send report reminders.[1]

How IGOR handles report content

A message must contain exactly one ReportingGroup for each CrsBody or FATCA element. Under CRS, that group contains AccountReports only. Under the Model 1 IGA used for FATCA reporting, a PoolReport is not permitted and causes rejection of the message.[1]

IGOR rejects a correction when its reference does not match a prior report, the referenced item has already been deleted, or the reporting periods differ. A corrected body also repeats the ReportingFI information linked to the original body. If a ReportingFI is deleted, all its current AccountReports must also be deleted, along with any FATCA Sponsor or Intermediary in that body.[1]

For domestic reporting, TransmittingCountry and ReceivingCountry fields are still required to pass schema validation, although IGOR ignores their content. Using GG in both fields is recommended, and GG is required as the CRS ReceivingCountry.[1]

IRS rules that may apply to U.S. persons

The IRS defines a U.S. person to include a U.S. citizen or resident. Its foreign trust guidance says U.S. persons who create a foreign trust, transact with one, are treated as its owner, or receive a distribution may have U.S. tax consequences and information reporting requirements. This is a separate set of rules from IGOR's reporting procedures for Guernsey financial institutions.[4]

A U.S. person treated as owner under the grantor trust rules may be required to ensure that the foreign trust files Form 3520-A and furnishes annual statements to U.S. owners and beneficiaries. If the trust does not file, the U.S. owner may need to complete a substitute Form 3520-A, attach it to the owner's timely Form 3520, and furnish the required statements.[4]

For income reporting, the IRS says a U.S. person treated as owner of a foreign trust is generally taxed on the trust's income. A U.S. beneficiary receiving a distribution from a foreign nongrantor trust generally reports the beneficiary's share of distributable net income. The statements accompanying Form 3520-A can provide information relevant to the owner's income reporting or the beneficiary's distribution.[4]

The IRS lists other reporting regimes that can apply in addition to Forms 3520 and 3520-A, including Form 8938 for specified foreign financial assets and FinCEN Form 114 for foreign bank and financial accounts. Whether those requirements apply depends on the circumstances described in the relevant rules; a connection to a Guernsey trust alone does not mean that every form is required.[4]

Reading the two reporting systems together

IGOR covers reports submitted by financial institutions to Guernsey's Revenue Service and onward information transmission. IRS foreign trust rules address U.S. persons' own reporting and income treatment based on their role and transactions. A report submitted through IGOR does not, by itself, replace any IRS filing described for a U.S. person.[1][4]

The IRS instructions distinguish reportable events and roles, including transferor, owner and beneficiary. Form 3520 reporting can be required even when there were no transactions involving the trust during the tax year if the filer is treated as owner and must complete Part II. Reporting exceptions may apply, so the presence of a foreign trust alone does not establish that every listed form is required.[5]

Related reading

The companion page Guernsey reporting and U.S. foreign trust forms explains the relevant reporting obligations. Guernsey and U.S. tax agreements addresses Guernsey's entries in treaty and FATCA materials. Guernsey Trust Types and Features explains Guernsey trust structures, while Guernsey Trust Legislation covers the trust statute.

Questions and answers

When can Form 3520 apply to a U.S. citizen connected to a foreign trust?

The IRS instructions identify creating or transferring property to a foreign trust, receiving a distribution, or being treated as the U.S. owner as circumstances that can require Form 3520. Loans and uncompensated use can also be reportable in specified cases.[4]

When can Form 3520-A be relevant?

The IRS says a U.S. person treated as owner under the grantor trust rules must ensure that the foreign trust timely files Form 3520-A and provides annual statements. If the trust does not file, the U.S. owner may need to attach a substitute Form 3520-A to the owner's Form 3520.[4]

Does an IGOR report settle a U.S. person's IRS reporting duties?

The two systems cover different reporting contexts. IGOR handles information submitted by Guernsey financial institutions, while IRS rules can require a U.S. person to report trust transactions, ownership or distributions on the applicable forms.[1][4]

Which other U.S. reporting forms does the IRS identify?

The IRS identifies Form 8938 for specified foreign financial assets and FinCEN Form 114 for foreign bank and financial accounts as reporting rules that may apply in addition to Forms 3520 and 3520-A. Form 8938 and FinCEN Form 114 each have their own reporting requirements.[4]

Related glossary terms

  • Section 679: Section 679 addresses certain transfers by U.S. persons to foreign trusts. It treats some property transfers as ownership when the trust has a U.S. beneficiary.
  • Section 6048: Section 6048 sets information reporting rules for certain foreign trusts. Its parts cover notice of events, U.S. owner duties and beneficiary distributions.
  • Income tax treaty: An income tax treaty may provide reduced U.S. tax rates or exemptions for specified U.S.-source income. Rules vary by country and income type under each treaty.

Related articles and guides

  • Guernsey Trust Legislation: Guernsey's principal trust statute and selected rules on powers and trustees, protectors, trust duration and purpose trusts, for U.S. citizen readers.
  • Guernsey Trust Types and Features: Guernsey law defines trusts and describes discretionary and purpose trusts, with rules on reserved powers, trust duration and creation for U.S. citizens.
  • Cook Islands trust tax and reporting rules: Cook Islands trust legislation and revenue rules on tax information reporting, with the IRS reporting rules for a U.S. citizen with a Cook Islands trust.

Tools and official documents

Sources and data notes
  1. States of Guernsey Revenue Service, IGOR XML Reporting Guide. https://igor.gov.gg/about/schemaguide. Retrieved .
  2. U.S. Department of the Treasury, Foreign Account Tax Compliance Act: agreements and understandings by jurisdiction. https://home.treasury.gov/policy-issues/tax-policy/foreign-account-tax-compliance-act. Retrieved .
  3. Internal Revenue Service, United States income tax treaties, A to Z. https://www.irs.gov/businesses/international-businesses/united-states-income-tax-treaties-a-to-z. Retrieved .
  4. Internal Revenue Service, Foreign trust reporting requirements and tax consequences. https://www.irs.gov/businesses/international-businesses/foreign-trust-reporting-requirements-and-tax-consequences. Retrieved .
  5. Internal Revenue Service, Instructions for Form 3520. https://www.irs.gov/instructions/i3520. Retrieved .

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