Tax Mitigation Jurisdictions

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.

 

 

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

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

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.