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Jersey Companies

SYNOPSIS: British Crown Protectorate. Effectively self-governing in all matters save defence, however, in theory ultimate power still rests with the British Parliament. Excellent efficiency. English speaking. Low individual and corporate taxation for residents. Residents are taxed on their worldwide income. Like the Isle of Man Jersey has greatly increased its due diligence requirements with all trust and corporate service providers now having to be licensed and "know their client". The Jersey Financial Services Commission is known for being very strict and is primarily seeking the high end of the offshore market. Unlike the Isle of Man, Jersey does not enjoy a Customs Union with the UK for VAT purposes (Protocol 3 of the Treaty of Accession, 1972). Significant number of ship and yacht registrations. Growing banking and insurance sector. 50% of GNP derives from financial and related services. Tax treaty with the UK with disclosure of information provisions with respect to UK residents. For certain inheritance tax purposes, British nationals may not be deemed to have lost their British domicile even if living in the Jersey. Apart from UK no other tax treaties.

 
 
STAR RATINGS  
   
Corporate registration efficiency: 
Cost:   
Confidentiality: 
Local banking facilities: 
Legal system: 
Political stability:  
Reputation:
 

LOCATION

Jersey is located just off the French coast beside Guernsey and Alderney.

 

RELATIONSHIP WITH THE UK

Under Protocol 3 of the Treaty of Accession, 1972,( a U.K. Statute ) Jersey and the other Channel Islands are part of the customs union and therefore must ensure a level of tariffs and duties consistent with those of the European Union. V.A.T. and EU “Directives”/”Regulations" do not apply. Politically, the legislative body is the "States". However, all long-term legislation must be ratified in the U.K. by convention. The United Kingdom Parliament does not legislate, although technically having the right to do so, without the permission of the Jersey Government. It will be noted that there is a distinction between the confidentiality rating for U.K. and non U.K. nationals (or, residents). The reasons behind this distinction are the same as for the Isle of Man, subject to the caveat that the Jersey Financial Services Department is notorious for its enforcement. 
 

ADVANTAGES OF JERSEY COMPANY

  • There is no specific minimum capital requirement. In most cases, a registration agent will only issue two shares.
  • All Jersey companies require a local registered office for service of process.
  • Both registered and bearer shares can be issued.
  • There must be at least two directors in a Jersey company and directors must be real people.
  • Public anonymity can be obtained by the employment of nominee directors/shareholders.
  • Since 1993, it is possible to have single subscriber companies.
  • A full register of members and charges must be kept at the registered office in Jersey. It is no longer necessary to adopt an official company seal although most companies still request one.
  • The name of the required company should be checked with the Registrar and the ending will be either Limited or Public Limited Company.
  • Developed and favourable corporate law.
  • Statutes less bureaucratic than British or Irish equivalents.
  • Branches of foreign companies in the Jersey may apply for exempt tax status. In other words, it may be possible to register a branch of a Delaware non-resident LLC in the Jersey.
  • Excellent air and sea communications.
  • Well educated population.
  • No accounts or annual summaries need to be filed with the Jersey Government in the case of Exempt companies

 

TAXATION

The indigenous corporate tax rate for Jersey residents conducting business in or from the Island with a company is 20%. Where real or beneficial ownership does not so rest, the above tax rate will not apply, even if management and control is carried out on behalf of a non-resident. The taxation liabilities of non-indigenous companies are as follows:

EXEMPT COMPANIES: To qualify as a tax exempt company it is necessary to show that no beneficial ownership rests with a Jersey resident and that the objective of the business is not to penetrate the local market. Unlike Isle of Man Exempt Companies there is no legal necessity to employ local directors or a secretary, however, given that most clients wish to demonstrate indigenous management and control, such companies do generally have Jersey nominees. In lieu of local taxation, the company is liable to pay an annual exempt duty of Sterling £600.00. The application for this status must be made on, or before, the 31st of March of the year in which the exemption status is sought. For newly incorporated undertakings, which by definition may not even have existed in March, an application must be received within 3 months of the date of incorporation. In addition to the exempt duty there is also an annual filing fee of £150.00 to be paid each January to the Registrar of Companies. Late payment, i.e. after February, will result in heavy fines. Exempt Companies are ideal for passive activities such as holding property but are not generally suitable for trading activities (see Isle of Man Exempt companies above).

INTERNATIONAL COMPANIES: International Companies are deemed resident in Jersey for tax purposes. However, the tax actually paid will be negotiable provided all activities are outside of Jersey. The criteria for ownership is virtually identical to that for an Exempt Company in that there must be a declaration stating that beneficial ownership does not rest with a Jersey resident. The advantage of such a company over a standard Exempt undertaking is that it may benefit from Jersey's double taxation treaty with the United Kingdom and, perhaps, circumvent various high tax jurisdictions anti-avoidance provisions. Many such provisions only apply if a foreign company only pays a set duty in lieu of variable taxes. For income which is generated from activities which occur on the Island the full 20% Jersey tax rate will apply, however, where this is not the case there will be a sliding-scale of rates varying from 0.5% where profits are over £10,000,000.00 to 2% where they are less than £3,000,000.00. International Company status must be elected by the 31st of October of the year in which the favourable tax regime is sought. If, because of recent incorporation, this is not possible, then the election must take place within 3 months of the incorporation date. Finally, it should be noted that 'international' status can be applied for by non-Jersey companies which satisfy the standard management and control tests.

 

HOW TO INCORPORATE A JERSEY COMPANY

As with the Isle of Man, all Jersey companies are considered indigenous until an appropriate election is made. The governing legislation, principally the Companies (Jersey) Law of 1991, and formation procedures are almost identical for all types of undertaking. Nominees can be used for anonymity, although detailed information on the beneficial owners of the company must be supplied to the Financial Services Department. Further, if an intending Exempt or International Company trades before making an election, it could be fully subject to Jersey tax at 20% on its world-wide income.

 

CORPORATE REQUIREMENTS

  • Name: The name of the required company should be checked with the Financial Services Department. In the vast majority of cases the ending will be either 'Limited' or Public Limited Company. However, it is possible to use the French equivalent "avec responsabilite limitee".
  • Capital: There is no specific minimum capital requirement. In most cases, a registration agent will only issue two £1.00 shares. Share capital can be denominated in any currency. The maximum authorised capital available paying the minimum duty is Sterling £2,500.00. If sums are required over this amount, additional duty will be payable.
  • Registered Office: All Jersey companies require a local registered office for service of process.
  • Registered Agent/Nominees: Jersey companies do not need a local agent or nominee although such a structure may be advisable for tax planning purposes.
  • Board of Directors: Private Jersey companies only require one director. Directors must be real individuals and not corporate entities. There are no nationality/residence restrictions.
  • Shareholders: Jersey law requires a minimum of two initial subscribers, however, as stated above there need only be one director.
  • Books, records and seal: Full register of members and charges must be kept at the registered office in Jersey. Unlike the Isle of Man, an official company seal must be adopted.
  • Powers of attorney: All Jersey companies may grant a general or specific power of attorney to any person, to act on its behalf, to execute contracts, agreements, deeds and other instruments. These powers are not a matter of public record.
  • Bearer shares: Bearer shares are not available in Jersey.
  • Annual Meetings: All Jersey companies must hold an annual general meeting with no more than an 18 month gap between such meetings. Meetings can be held inside or outside of Jersey.
  • Trusts: Without doubt, Jersey is the most sophisticated and monitored offshore trust jurisdiction in the British Isles. Trustees tend to be of a high calibre. Trust law is based on that of England, although with far more favourable provisions. Anti-avoidance legislation in the UK can, however, affect their use.

 

ANNUAL FEES AND GOVERNMENT TAXES

All Jersey companies must submit an annual return to the Registrar whether or not the company has traded. This demands full details on all capital, membership and officerial developments, if any, over the preceding year. The current filing fee is £150.00. If a company, which has not made an election, has conducted no business (business however including the activation of a bank account) no duty or general tax liability will exist. For International Companies, it should be remembered that once the election has been made the deposit against future taxes of £1,200.00, is not refundable even if the company lay dormant. For Exempt Companies, the £600.00 is, as already indicated, payable in advance. No rebates are given. All Jersey companies must maintain proper accountancy records. However, Exempt Companies do not have to file accounts. For indigenous and International Companies filed accounts do not need to be audited, unless the company is a PLC, provided appropriate amendments have been made to the articles of association.

Penalties for non-payment: As with most similar jurisdictions there are penalties for those who have not submitted their annual returns/duties on time. Late penalties are similar to those of the Isle of Man and Guernsey. Struck-off companies are difficult and expensive to reinstate.

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