EBT – Employee Benefit Trusts

An EBT is a trust which is established by an employer, (as settlor), on behalf of its employees, former employees, and dependants, (the beneficiaries). An independent firm is often selected as trustee to hold and administer the assets, for the benefit of the beneficiaries. While an EBT is straight forward to establish structuring can be complex and will usually require legal and professional advice. Such services are readily available in Guernsey and will ensure that the scheme complies with relevant legislation and yet is flexible enough to meets the needs of both the employer and employee.

Why would a company establish a scheme?

In a globally mobile environment employers are increasing looking to attract the most talented employees and to retain key personnel. The EBT can be used for this purpose and also as an incentive scheme for existing employees. An employer may want to provide employees with access to company shares, or the option to acquire such shares, or they may want to offer deferred incentives, pension schemes or simply provide staff benefits outside of their contractual arrangements.

For what purposes can they be established?

EBTs can be established for a variety of reasons. Typically these might include;

• As an incentive scheme for employees – eg by provision of a deferred bonus scheme
• Provision of benefits outside contractual arrangements
• To provide a vehicle to promote share ownership among employees
• Provide access to shares of a private company
• Creating liquidity for such unlisted shares for example by establishing an internal market
• Enable employees to see share ownership as a "real" benefit if they are able to realise a value via share participation
• Can assist in proving an exit strategy in the event of a sale of the business, IPO or merger
• Promote long service and loyalty with offers of shares in the future based on, for example, performance
• Use of options to promote share ownership.

Guernsey is an ideal base for International Employee Benefit Trusts (EBT) and Incentive Schemes. It has an outstanding reputation as an International Financial jurisdiction, and is a centre of excellence for financial services and pension innovation. In a volatile world Guernsey offers reassuring political stability, a high degree of regulation and is recognised as one of the world’s premier International offshore centres. As one of the leading financial centres in the world, Guernsey has attracted and developed unrivalled expertise in financial services products, legislation and innovation. It is this expertise that makes Guernsey a natural choice where International Pensions and Incentives and practical solutions are required. Guernsey also has an established domestic and international pension system that has been successful over 30 years.

Key Features 

• Incentivises employees 
• Helps to align employees’ interests more with the shareholders’ objectives 
• Acts as a strong incentive for attracting new talent and for rewarding loyalty 
• Tailorable and flexible scheme rules 
• Established within a tax neutral International financial centre. 
• Removes the benefit scheme from the employer and places it in the hands of an independent. 

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