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Guernsey Adopts World-First Image Rights Law

by Jason Gorringe,, London

03 December 2012

The world's first image rights legislation, The Image Rights (Bailiwick of Guernsey) Ordinance, 2012, is to enter into force on December 3, 2012, following approval by Guernsey's legislative assembly, the States, on November 28, 2012.

The legislation positions Guernsey as the first jurisdiction to have a legislative framework to register an image, enabling effective management and control of the commercial use of a person's identity, images associated with that person, including distinctive characteristics, such as signature, voice, mannerisms and gestures.

The legislation not only establishes image rights as a new and separate branch of intellectual property law, it will also provide clearly defined safeguards for celebrities and sports personalities looking to further protect and capitalize on their image.

The ground-breaking law will create an image rights register enabling legal recognition of a "registered personality" (i.e. the exclusive rights to the images associated with or registered against the personality). Once registered, the image right, as an identifiable asset, can be placed within a Guernsey structure, adding flexibility to allow image rights income to be channeled into a wealth management structure such as a trust, or for instance, a partnership structure to overcome complex asset ownership arrangements.

Welcoming the States of Guernsey's endorsement of the law, Fiona Le Poidevin, Chief Executive of Guernsey Finance, the promotional agency for the island’s finance industry, said:

“We believe that the new legislation will be attractive to global brands and in particular sports and entertainment stars where their image is a particularly important asset both to be protected and exploited for commercial gain. The hope is that they will use Guernsey for its unique image rights capability as well as the island’s broader wealth management offering to service other needs."

“Guernsey has a long and strong heritage in providing services to private clients from around the world in a well-regulated environment. As a result, the island has built significant private banking capacity, extensive experience and expertise in trust and company administration and the Guernsey government has also agreed to introduce foundations into local law, with Privy Council approval expected early next year."

“This new image rights legislation adds another complementary element to our offering and we will be promoting it heavily to clients and their advisers in the coming months. We will start by focusing on the UK and, in particular, London, which remains our principal source of new business, by hosting an event in the city during January next year. We will also be publicizing the legislation in the US and the increasingly important Asian markets.”

“Being able to register image rights in an environment which recognizes them by statute provides greater clarity in the definition of rights and a higher degree of protection from unauthorized use by third parties than is currently on offer in any other jurisdiction. This is the basis for a valuation of the rights and therefore provides a platform for increased economic benefit to be derived, including through the management, structuring and licensing of the rights."

“This legislation will be particularly useful in helping to prevent high profile individuals from becoming the centre of disputes when they die. Succession planning provisions within the Guernsey law mean that registered rights can be treated as part of the deceased’s estate and it can then be specified how these rights are dealt with and who should benefit from them.”

By establishing a legal structure to house one's image offshore, significant tax advantages can be unlocked. The new legislation will enhance the argument that income derived from image rights should be taxable in the jurisdiction in which they are registered. The development of Guernsey's legislation comes after years of uncertainty surrounding the tax treatment of endorsements and sponsorship deals received by sporting personalities, musicians and media personalities. Most recently, the UK tax authority, HMRC, has sought to receive a share of sports personalities' image rights income when they appear on UK soil, regardless of where their image rights are said to be structured.

TAGS: individuals | Wealth | tax | business | artists | law | intellectual property | entertainers | entrepreneurs | Guernsey | tax authority | offshore | sportsmen | self-employment | legislation | tax planning

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