Guernsey was once part of Normandy, as were the other Channel Islands.  In the 15th Century Guernsey, Sark and Alderney were placed under the control of a Governor, a role which later became the Lieutenant-Governor, a post that still exists to this day. Although foreign affairs and defence are dealt with by the UK, Guernsey is self-governing and has its own laws and fiscal independence from the UK. Guernsey has enjoyed continuity and stability of government for over 900 years.

Guernsey enjoys a special relationship with the European Union (EU).  This is defined by Protocol 3 to the 1973 Treaty of Accession of the UK to the European Community, which can only be changed by the unanimous resolution of all the member states (including the UK).  This Protocol excludes Guernsey from most of the effects of the Treaty of Rome.  There are, however, special arrangements under Protocol 3 for the free movement of manufactured and agricultural goods between Guernsey and the EU member states.  Guernsey has a flourishing finance industry with a maximum income tax rate of 20% and no capital gains, inheritance, capital transfer, VAT / TVA or withholding taxes.