Sark: The “secret” European haven for libertarians

The tiny, self-governing European island of Sark is a hidden gem among European micro-nations. It’s an unusual jurisdiction, but one that could work perfectly for some of you. Watch our recent recording or read about why below

Sark is a libertarian haven because of its old-fashioned approach to bureaucracy, regulation, and governance. Its annual tax return consists of one single page, there is no employment law whatsoever, and the government is legally prohibited from taking on debt. In many ways, Sark shows the world how to run a country on the back of a truly minimalistic government – and with maximum freedom for its residents!

Despite its many advantages for those seeking to pay minimal taxes and free themselves from excessive government regulation, the island has done little to promote itself as a potential residence – until recently.

The current drive to double (!) Sark’s population was initiated by a private entrepreneur who’s lived on the island for many years. That in itself speaks volumes. The government is so minimalistic that it leaves it to a private enterprise to promote the jurisdiction (which means no precious tax money has to go towards the effort). The Head of State, the Seigneur of Sark, is backing the initiative. 

I spoke to the man driving the initiative. My article is a primer on everything Sark can – and cannot – offer to help create a new lifestyle for yourself.

What and where is Sark?

Sark sits within the English Channel, close to France. It is one of the Channel Islands, a so-called Crown dependency.

As Crown dependencies, the Channel Islands are not legally part of the UK, even though they are closely affiliated with the UK and part of a complex web of relationships and customs. The Channel Islands never joined the EU, following a 1973 referendum in which the islanders said: “Thanks, but no thanks.”

There are some great practical advantages to the set-up:

• Sark sets its own laws, including its own taxes.
• Residents of Sark do not need to deal with any other government. The other Channel Islands (Guernsey, Alderney, Herm and Jersey) and the UK have no hold over them, for as long as Sarkees show that they can govern themselves.
• Long-term residents can even get Channel Islands citizenship. The accompanying passport is similar to the British one, but lower-profile politically.

On a more practical level, Sark residents get to enjoy the following advantages:

• A one-page tax return that does not require the disclosure of income or assets if you don’t want to. Residents can opt to pay an additional flat tax in exchange for not providing personal information. 
• Annual tax is capped at GBP 13,500 for anyone; although more realistically, the tax range will be between GBP 1,000 and GBP 4,000 per year. Just four people on the island are said to be paying the maximum amount.
• Businesses benefit from a traditional approach to proportional legislation. There is no employment law, freeing companies from any risk of expensive employment lawsuits. Employees are, of course, protected under normal commercial law; e.g., they could sue for non-payment of their salary.
• For certain business that require licensing (such as financial services, healthcare, tourism operations), there is legislation in place that protects consumers but which remains reasonable and entirely feasible for entrepreneurs. The Channel Islands are a can-do jurisdiction. Notably, there is no company register on Sark. However, companies incorporated elsewhere can be domiciled in Sark. In practical terms, Sark residents would usually incorporate in a place like Guernsey, the Isle of Man, Panama, or the British Virgin Islands.

 

How do you get to make use of this paradise? 

Swen Lorenz, a 45-year old German entrepreneur who first moved to Sark in 2004, has the answer. He is driving the attempt to double the island’s population from its current level of 400 to somewhere between 800 and 1,000.

“Residents wanted!”

Somewhat counterintuitively, Sark doesn’t have a waiting list for new residents, nor are property prices sky-high.

Since 2008, property prices have fallen by 50%. They are now roughly on par with London’s Zone 3. A 100-year leasehold for a family home would cost you approximately GBP 350,000 to GBP 500,000 (and freeholds are rare up to now, but would be similarly priced). A one-bedroom apartment could be rented for GBP 700 to GBP 1,000 per month.

Sark’s population used to be around 650, but some of the old-time residents were driven away by a combination of bad planning, lack of government policies and local political spats. As a result, the island currently has a large number of empty and decaying properties. Sark is visibly crying out for new residents!

When rumours made the round that the island’s main supermarket might have to shut down because of a lack of customers, Lorenz acted. Enter his “Sark Society”, a membership programme designed to recruit new residents for the island.

Membership in the Sark Society comprises a full relocation service, with several layers of benefits:

• A manual with over 250 pages of information. “How (and why) to move to Sark” is designed to get potential new residents going by providing detailed answers to as many answers as possible.
• Personal and individual advice on how to make the move. If there is any additional information that a would-be resident requires (which isn’t already answered by the manual), Lorenz will chase it down personally. He may even be able to help with establishing residence ahead of the year-end settlement deadline for EU/EEA/Swiss citizens without visiting (entirely legal!).
• Support with finding a suitable property. While some of the island’s real estate offerings are listed with an estate agent, many others are only available privately. Lorenz is happy to make the necessary introductions.

The full relocation package is currently priced at GBP 1,300 (USD 1,650). At least for now, Lorenz offers his subsequent support without putting any time limit on it. However, he is considering to up the price significantly and limit the amount of his consulting time once more than 50 people have signed up. When I spoke to him, he was going on 40 packages sold and the first new residents had already moved to the island. One of his clients has rented Sark’s light-house apartment, a truly unique home!  

In multiple interviews and media statements, the Seigneur confirmed that Sark needed more residents:

https://www.bbc.com/news/world-europe-guernsey-53743415

https://guernseypress.com/news/2020/09/01/sark-should-have-around-650-to-800-people-says-seigneur/

As with any jurisdiction, Sark has its quirks. The island won’t be for everyone, but it could be THE solution for some of you.

Considerations for moving to Sark

On the upside, Sark offers all of the following:

• A lifestyle set by the sea, with an unspoilt countryside and coastline. Sark is a tourist island, and residents get to benefit from its attractions year-round.
• A small community where everyone knows everyone else. It makes for a charming place if you have children or prefer to live in a place where you don’t have to lock your door.
• A lean and efficient tax system. You don’t even need to keep accounts, neither for yourself nor (if you plan it properly) for your corporation. You could limit your entire tax burden to somewhere between GBP 1,000 and GBP 4,000 per year, depending on the size of the property you inhabit. A one-bedroom flat will cost you an annual tax at the lower end of this range, a three-bedroom family home with a garden comes out at the upper end.
• A fast Internet connection, which makes Sark the ideal breeding ground for online entrepreneurs – such as the first “trial” residents that Lorenz brought to the island (find out how their lives have changed in this 19-minute video interview: http://www.sarksociety.com).
• A down-and-out property market. The island is currently finalising a legal reform of this market, which will bring the most far-reaching changes since 1607. Mortgages have been illegal for the past four centuries, but will soon become available. On his investment blog, Lorenz wrote about the investment angle of Sark property: https://www.undervalued-shares.com/weekly-dispatches/sark-investment-opportunity-of-a-decade
• A Western Europe domicile outside of the EU.
• A high level of political stability, which is unlikely to change. Sark is one of the world’s few debt-free societies (and certainly a rare case in debt-laden Western Europe!). It doesn’t have political parties, does not attract waves of economic migrants from third world countries, and there is no state apparatus or surveillance bureaucracy as you’d know it from most Western European countries. 

 

On the downside, you should consider the following factors:

• Sark does not have an airport. You need to take the ferry (45 minutes) to neighbouring Guernsey first. Most flight connections from Guernsey are to the UK only. If you regularly have to travel to Continental Europe, you do need to budget extra time and money to get there. A helicopter landing pad and a quick connection to Guernsey airport or even London-Battersea are long-term possibilities, but politically controversial and not currently under concrete preparation. Though given the current innovations in personal mobility, something is likely to change one way or another.
• During winter, Sark goes into a state of semi-hibernation. The annual 60,000 tourists that visit Sark for its beauty and leisurely pace of life make for a surprisingly thriving restaurant scene during summer. However, from November to March, when tourism numbers go down to almost zero, the opposite is the case. All but two bars and one restaurant close down. 
• Sark does not permit cars. It’s tractors, bicycles and horses only (though you could register a car tax-free on Guernsey and use it in Continental Europe). 
• The island doesn’t have flashy night clubs, and its cultural life is limited. If you want big city life, Sark is never going to be for you – even though neighbouring Guernsey does provide all sorts of facilities, also driven by Guernsey’s significant wealth and its standing as a serious European financial centre (over 50% of all corporate bonds issued in Europe originate in Guernsey).  
• Sark and the Channel Islands as a whole are complex jurisdictions that require a fair bit of know-how to make use of them. If you are not willing to put in the hours to learn how it all works, you could fall into a variety of pitfalls. Depending on the kind of business you engage in, you might need to seek specialised legal advice. Relying on free online sources will be a risky business, because many of them are either outdated, incomplete, or simply erroneous. 

If this makes it sound like Sark fits the bill for you, there are several ways to become a resident. EU/EEA/Swiss citizens need to bear in mind the 31 December 2020 settlement deadline, which they should not miss.

 

How to establish Sark residency

It is currently surprisingly easy to establish residency on Sark, provided you are one of the 500m people who hold an EU, EEA, Swiss, British or Irish passport. In that case, you simply need to rent or buy a property on the island. That’s all.

If you do not hold any of these passports, then you can still freely buy a property. However, to actually move there yourself you will have to go for one of the following two options:

Entrepreneur visa: Invest into a local business that you become the majority owner of, and create economic benefits. In real-life terms, this would normally involve an investment of GBP 50k to GBP 200k and creating two local jobs (not counting your own position). 

Investor visa: Invest GBP 1m into the local economy, which can be done via bonds and equities.

Obviously, as a citizen of the EU/EEA/Switzerland you currently have a particularly tantalising choice. You can get in on the back of merely filling out a form which will give you “pre-settled” status (i.e. the right to stay for five years) under the EU/UK/Brexit regulations. At the end of the five-year period you can get permanent residency and (if you play your cards right) even citizenship. EU/EEA/Swiss citizens who miss the year-end 2020 deadline will need the same route from next year as everyone else: entrepreneur visa or investor visa.

Lorenz told me: “The majority of my clients are currently from the EU. They are desperate to get out before the year-end, because getting a Sark residency will become MUCH more complicated and expensive from January 2021.”

British and Irish nationals can move to Sark without any questions asked, because the Channel Islands form part of the Common Travel Area (UK, Ireland, Isle of Man, Channel Islands). Nota bene, there is no border as such between the Channel Islands and the UK. Upon landing in UK airports from the Channel Islands, passengers go through special gates that give them border-free entry.

To have stressed it, property purchases are open to anyone. There is no limit on buying leaseholds or freeholds, contrary to what you will read on quite a few websites. Given the bombed-out price level and the current developments in the world, some will come to view Sark property as an attractive investment with a free “insurance” thrown in for free. Sark is definitely a refuge from the troubles of this world. In line with that, both Guernsey and Sark have had zero restrictions (no masks, no social distancing) on their own residents since July.

The restriction-free life of existing residents involves strictly controlling the flow of international travellers. Sark and Guernsey currently have COVID-19 travel restrictions in place. Check https://covid19.gov.gg/guidance/travel for the latest updates. Visitors from “safe” countries currently need to quarantine for 7 days and then get a test with a negative result. There MIGHT be a change to a 2-day quarantine system in late October or early November. 

The Sark opportunity – my conclusion 

Sark ticks many boxes of what a jurisdiction should offer.

At the same time, it is limited in terms of its capacity. With a land mass that is 2.5 times the size of Monaco, the island is tiny. Plus, it entails a lifestyle that will not be for everyone. 

There are many routes for you to explore this option further. The most obvious one is that provided by Lorenz, which you can read more about here: http://www.sarksociety.com 

Outside of Lorenz’ Sark Society membership package, they include speaking to the big law firms and professional advisory services on Guernsey, such as Mourant Ozannes, PwC, and KPMG.

If Sark sounds like your cup of tea, my advice is to not delay your investigation for too long. Once there are 800 or 900 residents on Sark, it will become a lot harder and certainly more expensive to become a resident. Never mind the year-end settlement deadline for EU citizens!