Jersey
Executive Summary
Jersey Not In EU Fiscal Area
The
island of Jersey, one of the Channel Islands
between England and France, is a British Crown
dependency although in practice is it self governing.
Britain is responsible for its external affairs
including negotiations with the European Union;
under the UK's accession treaty with the EU,
Jersey forms part of the single market but is
outside the EU fiscal area. Jersey does not
generally enter double-tax agreements, but has
treaties with the UK and Guernsey, and a limited
treaty with France.
Economy Buoyant But Jersey Is Full Up!
Jersey
has a buoyant economy dominated by the finance
sector. Unemployment is very low. The political
stability in Jersey together with its consistently
low tax status and its international reputation
as an important financial centre make it an
attractive prospect to foreign investors and
workers. To protect the island's limited resources
the government tends to discourage labour-intensive
inward investment that is controlled by non
residents. There are no investment grants or
incentives, but electronics and other knowledge-based
industries have been encouraged.
Jersey's Lowtax Specialisations
Jersey
has particularly strong banking, investment
fund and trusts sectors, with very well-developed
advisory and financial infrastructure. The Jersey
Financial Services Commission's quarterly report
for the period to December 31, 2008 shows that
almost 50 banks held deposits of GBP206 billion.
The Net Asset Value of funds under administration
has reached record levels of GBP241.2 billion
and has, for the first time, overtaken the level
of bank deposits held.
There
are a number of low-tax business formats, including
International Business Companies, 'Exempt' companies,
and Limited Partnerships. However in accordance
with the Island’s commitment to the European
Council of Finance Ministers (Ecofin), Jersey
has pledged to ensure that no new International
Business Companies are capable of being formed
from 1st January, 2006. The introduction of
the new 'zero/ten' tax regime on January 1,
2009 also put paid to the exempt company, although
non-financial services companies qualify for
the 0% corporate tax.
Jersey v. the EU and the OECD?
Jersey's
unique situation with regard to the EU is both
a strength and a weakness. The island will remain
a favoured base for holding and trading companies
working into the EU, and for e-commerce activity;
but it has the EU and the OECD to contend with.
After several years of 'hands-off' policy in
regard to Jersey taxation, the UK government
in 2002 threatened Jersey with sanctions if
it didn't fall in line with EU information-sharing
rules.
Jersey
signed a 'commitment' letter to the OECD in
February 2002, but it contained an 'Isle of
Man' level playing field clause making changes
dependent on comparable changes in Switzerland
and the USA. By mid-2003, however, the OECD
seemed to have forgiven Jersey, and was assisting
it to design a '0/10' corporate tax system.
It
remains to be seen how Jersey will emerge from
a second wave of attacks by the OECD against
offshore secrecy in the wake of the 2008 financial
crisis, but its commitment to fiscal transparency
through new Tax and Information Exchange Agreements
and its record as a reputable financial centre
should stand it in good stead.
In
May, 2002, it became clear that Jersey, along
with its fellow UK dependent territories Guernsey
and the Isle of Man, was ready to sign up to
the EU information-sharing regime. After the
EU finally reached its compromise agreement
on the Savings Tax Directive in early 2003,
Jersey decided, along with Guernsey and the
Isle of Man, to apply a withholding tax to the
returns on personal savings for EU residents.
The Directive came into force on July 1, 2005.
BACK
TO TOP
LOWTAX.NET
