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Jersey International Focus

By Lowtax Editorial
05 March, 2014

A small island in the English Channel it may be, but Jersey packs a serious punch on the world stage as an offshore financial centre (OFC), with an estimated GBP1.2 trillion of wealth held in the island’s banks, trusts, specialist corporate structures and investment funds. What’s more, three-quarters of this wealth originates from outside the United Kingdom, making Jersey a true international OFC.

About Jersey

Jersey is situated off the north-west coast of France in the English Channel. It is the largest and most southerly of the Channel Islands with an approximate area of 45 sq miles.

The resident population in July, 2013 was an estimated 95,732. English and French are both official languages and used widely.

Jersey is a British Crown dependency. The Queen of England is the head of state and represented by a lieutenant governor. The United Kingdom is responsible for defence and external relations but by long established constitutional convention Jersey is self-governing in matters of domestic policy.

The island has its own legislative assembly, the States of Jersey, and a comprehensive independent legal, fiscal and administrative system. The power to appoint certain local administrators is vested with the Crown; and with certain minor exceptions, legislation passed by the island's assembly must be validated by the UK Privy Council – normally this is just a formality.

The States of Jersey is a unicameral, directly elected body and there are no party politics. Apart from the few senior offices in the gift of the Crown, most executive powers are administered by committees of the States. This provides for direct, effective administration, but may be short on checks and balances. However, over many years the States has aimed at creating a well-regulated, efficient financial centre with up-to-date legal, judicial and regulatory frameworks. Broadly, it seems to have succeeded.

Economy and Business Environment

The economy is stable and is based largely on financial services, agriculture and tourism; of these, financial services is dominant, accounting for more than half of gross domestic product. The island has a balance of payments surplus, without external debt, and has low unemployment. The finance sector is dominated by banking, fund management and trust management. The Jersey currency is the pound which is on a par with the British pound; there are no exchange controls.

In terms of business and communications infrastructure, Jersey offers Western European standards. The business environment is particularly well-attuned to the finance sector as a result of the island's long-term policy of promoting itself as an international finance centre, accompanied by a well-developed regulatory structure, and careful supervision of incoming finance-sector businesses in order to screen out doubtful operations.

Relationship With The EU

Jersey is not a member of the EU, and Protocol No 3 of the UK's Treaty of Accession to the UK excludes the island from most of the effects of the Treaty, other than those concerning trade in goods. There is free movement of industrial and certain agricultural goods between the island and the UK according to historic Charter rights; and between the island and EEA countries except for some sensitive products. The island does though apply the external common customs tariff of the EU. However, EU (and hence UK) VAT does not apply to Jersey. 

Jersey's constitutional position in relation to the EU cannot be changed without unanimous agreement of the member states, including of course the UK.

Financial Sector Overview

As a rather broad generalisation, the business environment in Jersey has shown a marked tendency to become more international over the last few years, partly because of the usefulness of the island to multinationals setting up in the EU, and partly because of increasingly tough anti-avoidance rules that have made it difficult for UK citizens to make productive use of trusts.

In 2013, Jersey retained its top spot as the highest rated offshore jurisdiction in the latest biannual Global Financial Centres Index despite an overall fall in the rankings for the Channel Islands amid fierce onshore competition. Among offshore territories, Jersey was placed highest in 28th place, followed by Guernsey (31st), the Cayman Islands (41st) and the Isle of Man (43rd). London retained its place as the top financial centre, above New York, Hong Kong and Singapore.

The Jersey Financial Services Commission (FSC) is responsible for the regulation, supervision and development of the financial services industry in the Island of Jersey for banking, collective investment funds, fund services business, insurance business, general insurance mediation business, investment business, money service business, and trust and company service providers.

Additionally, the FSC is the supervisory body for those sectors that are subject to regulatory oversight of their anti-money laundering and countering the financing of terrorism responsibilities, which includes: accountants; lawyers; estate agents; high value goods dealers; and non-profit organizations.

Company Law

Companies incorporated in Jersey are governed by the Companies Law 1991 which is based largely on the English 1948 Companies Act.

Jersey company law allows for the formation of the following types of company:

  • Limited companies, with par value or no par value shares;
  • Guarantee companies, with members whose liability is limited to amounts committed by them by way of guarantee;
  • Unlimited companies, where the liability of members is unlimited;
  • Limited partnerships; and
  • Cell companies, which provide for the segregation of assets and liabilities within different cells.

Having abolished its Exempt Company and International Business Company regimes, Jersey law no longer permits the formation of tax-privileged ‘offshore’ companies. Instead, all companies are subject to the same low rate of income tax, which is 0% in most cases for non-resident companies (see below).

Jersey companies may be public or private. A public company is one which has more than 30 members or which declares in its Memorandum of Association that it is public. Public companies are required to file audited accounts with the Registrar of Companies. Only a public company may issue a prospectus and offer its shares for subscription to the public.

A private company is any company that is not a public company, although a private company's Memorandum must state that it is a private company.

Shelf companies are not available in Jersey; however the formation process is quick and inexpensive provided that a new company does not intend to carry on business on Jersey itself. There is an incorporation fee of GBP200 and an annual return fee of GBP150. A company must have a registered office in Jersey. Public companies need to file audited accounts, but private companies are not legally obliged to do so.

A private company must have at least one director, and a public company at least two. There is no requirement under the Law for directors appointed to Jersey companies to be resident in Jersey, nor is it necessary for meetings of directors to take place on the island. Directors also do not have to hold shares in the company.

It is a requirement under Jersey law that companies hold annual general meetings, unless the company’s Articles of Association provide otherwise, or all members agree in writing.

A company wanting to do business as such on the island will need to provide a great deal of information to the authorities in order to obtain the necessary consents and licenses; in fact the authorities actively discourage new business activity in most cases in order to conserve scarce resources.


A ‘zero/ten’ tax system for companies has applied from 2009. This was achieved by introducing a standard rate of corporate income tax of 0%, and a special rate of 10% for specified financial services companies (banks), into the Island’s existing schedular tax system. Utility companies, rental income and property development profits continue to be charged at the standard income tax rate of 20%.

The States agreed to introduce a broad-based, 3% Goods and Services Tax (GST) in 2008, with a registration threshold set at GBP300,000 of taxable turnover. This rate increased to 5% from June 1, 2011. However, financial services entities are generally exempt from the GST in order to preserve the competitiveness of Jersey’s finance centre.

For taxation purposes, an individual may be resident, ordinarily resident, or non-resident. These terms are not statutorily defined. An individual is considered resident in Jersey for income tax purposes if they:

  • are physically present in Jersey for more than six months in any one tax year, or
  • are present in Jersey for an average of least three months per year over a four year period, or
  • are maintaining an abode in Jersey and visit Jersey at some time during the tax year, even for only one day.

Ordinary residence suggests a greater degree of continuity than residence; non-residence is what it says.

Individuals resident and ordinarily resident in Jersey are subject to tax on their world-wide income.

Individuals who are resident but not ordinarily resident are subject to tax on their Jersey income and on any foreign income remitted to Jersey.

Non-resident individuals are taxed on Jersey income only, excluding Jersey bank interest (by concession).

Personal income is taxed at one rate of 20%. Social security contributions are also due at the following rates: 6.5% by the employer and 6% by the employee.

There is no capital gains tax, capital transfer tax, inheritance tax or wealth tax in Jersey.

Under the EU's Savings Tax Directive, withholding tax (known as a retention tax) is deducted from interest payments on savings made to people resident in EU member states, as from July 1, 2005, initially at a rate of 15%, (20% from July 1, 2008 and 35% from July 1, 2011).

Capital Markets

Jersey is the jurisdiction of choice for corporate entities seeking to list, with the greatest number of FTSE 100 companies registered outside of the UK, being registered in Jersey.

Jersey company structures are also playing an increasingly important role in channelling investment from emerging markets into the UK. Before 2008, 25 percent of Chinese companies listed on London’s Alternative Investment Market (AIM) were incorporated in Jersey, with the number now having risen to around one third. With the ability to trade shares directly through CREST and also as an approved jurisdiction for listing on the Hong Kong Stock Exchange, Jersey is one of the leading international finance centres used for listings.

There are 100 Jersey companies listed on stock exchanges worldwide, including 48 on the London Stock Exchange AIM market and 40 on the main market, as well as on Euronext, the Luxembourg Stock Exchange, the Hong Kong Stock Exchange, the Toronto Stock Exchange and the NASDAQ, with a total market capitalization of GBP168.6bn.

Enhancement's to Jersey's merger provisions, which entered into force on February 23, 2011, have enhanced Jersey's regime for international investors looking at opportunities to invest in Western markets. The regulations enable Jersey companies to merge with both foreign companies and other foreign bodies incorporated outside of Jersey; and also allow Jersey companies to merge, in any combination, with other Jersey companies or bodies incorporated in Jersey.


Banks are registered in Jersey under the Banking Business (Jersey) Law, 1991 and the associated Banking Business (General Provisions) (Jersey) Order 2002 which is administered by the Jersey FSC. Applications for new banks or branches (more usual) are carefully vetted both from a prudential point of view and commercially.

The Banking Law has three main objectives:

  • To protect depositors
  • To protect the reputation of Jersey as an international banking centre
  • To protect the best economic interests of Jersey.

It contains capital adequacy rules which are stiffer than the Basle requirements. 

In November 2009, Jersey’s States Assembly approved legislation to establish a Depositors Compensation Scheme in the island with immediate effect. The scheme provides protection of up to GBP50,000 per person, per Jersey banking group, for local and international depositors in line with international standards.

Jersey is home to global banking organisations from the UK, Europe, North America, South Africa, Asia, and the Middle East. Jersey only authorises the global top 500 banks to establish a presence in the island, a policy designed to ensure that only banks of the highest pedigree operate from the jurisdiction.

Traditional offshore banking, wealth management and financial planning services for individual investors have been major areas of business for Jersey’s banks. However, the jurisdiction has also become a leading finance centre in the provision of corporate banking services for multinational organisations, financial institutions, companies and firms with cross border interests and activities. For many corporate treasurers, institutional bankers and treasury specialists, fund promoters, brokers and other corporate financiers, Jersey represents an extension of the City of London.

Jersey’s banking sector also provides services to support the fast-growing alternative investment funds industry, in particular the real estate, private equity and hedge fund markets, offering, for example, loan facilities to acquire assets and bridging facilities where appropriate.

There are 42 banks located in Jersey and they include nearly half of the top 25 banks in the world, by Tier 1 Capital. The final quarter of 2013 saw Jersey deposits decrease by around 3.6 percent to stand at GBP139.9bn.

The Middle East and Gulf regions are becoming an important source of business for Jersey’s banking sector, with 13% of all bank deposits in the jurisdiction coming from these areas.


Collective Investment Funds are supervised by the Financial Services Commission under the Collective Investment Funds (Jersey) Law 1988. However, the emphasis of Jersey’s funds sector has shifted towards funds for institutional, specialist and expert investors.

In February, 2004, Jersey introduced 'expert' investor fund legislation. This gives qualifying fund managers freedom to offer funds to licensed investors without previously clearing them with the FSC, provided they stick to the guidelines. The Expert Fund regime was subsequently extended to closed-ended investment funds listed on European and other leading stock exchanges including the CISX.

In 2008, Jersey introduced an Unregulated Funds Regime designed to provide promoters and other fund introducers with the simplicity, certainty and speed they seek when setting up certain types of specialist fund.

Jersey funds may be established as companies, limited partnerships or unit trusts, and be open or closed-ended, providing significant flexibility for investor needs.  

Jersey has attracted a significant number of alternative funds and built up an experienced range of fund administrators, both as part of the services supplied by major custody banks and large specialist fund administration firms, and by boutique groups who can provide bespoke services to meet individual investor needs.

The value of total funds under investment management in Jersey increased to GBP22.2bn (USD37bn) during the fourth quarter of 2013, from GBP21.8bn in the previous quarter, although the net asset value of funds under administration in Jersey decreased slightly, from GBP194.8bn to GBP192.1bn.

The sophisticated end of the funds market performed most strongly at the end of last year, with unregulated funds continuing to grow and private equity and real estate fund values showing slight quarterly increases.

A rise in high value real estate and private equity funds targeting the United Kingdom, continental European, and global assets have been structured through Jersey in recent months, providing evidence of Jersey's growing appeal as an alternative investment funds domicile. In the six months to March 2014, a number of major and innovative real estate and private equity fund structures have been reported by Jersey law firms, involving a combination of European and non-European assets and investors.

There are now over 1,300 regulated and 189 unregulated funds registered in Jersey.

At first, it was thought that moves to increase regulatory oversight of the funds sector by onshore governments, particularly with regards to alternative investments (read: hedge funds), posed a threat to the burgeoning offshore funds industry. However, Jersey and other jurisdictions selling funds into Europe are viewing the EU’s newly introduced Alternative Investment Fund Managers Directive as an opportunity rather than a burden.

According to Ben Robins, Chairman of the Jersey Funds Association (JFA), Jersey’s pro-active and flexible approach to the adoption of new international regulation will ensure its funds industry can look forward to a positive future,

 “With the pro-active approach Jersey has taken, I am convinced that we are in an extremely strong position to continue to act as a specialist center for alternative funds business, both in and outside of Europe. It is particularly welcome news that, having now signed 27 bilateral cooperation agreements with EU Members States, including the UK, Germany and France, the Jersey Financial Services Commission is now ready to [begin] accepting applications from local alternative fund managers enabling them to continue to access EU markets."


Trust management, particularly for wealthy UK individuals, was Jersey's traditional business. Successive tightenings of UK anti-avoidance legislation have reduced the possibilities for UK citizens, but Jersey's trust business has continued to grow based on a more international clientele, and following the introduction of the purpose trust, a surge in corporate trust work.

Jersey regards itself as the leading common law trust jurisdiction and it has an extremely well-developed legal and financial infrastructure for trust management. Jersey has a total of 892 regulated trust company businesses and total trust assets looked after on the island total GBP400bn.

The emphasis today has shifted away from the very simple trust and underlying company structure for UK families, to high value and more complex structures involving trusts, companies, limited partnerships and now foundations for international families.

Jersey trusts are governed by The Trust (Jersey) Law 1984, which codified trust law largely along the lines of English-based common law. 'Purpose' trusts were recognized in 1996.

The following types of trust can be formed in Jersey:

  • Discretionary trusts and interest in possession trusts;
  • Reserved powers trusts (where the Settlor reserves to himself or herself certain powers, rather than entirely vesting them in the trustee on establishment);
  • Unit trusts (including property unit trusts);
  • Charitable trusts;
  • Non-charitable purpose trusts (these trusts have an additional requirement of an ‘enforcer’ whose role is to enforce the purposes); and
  • Accumulation and maintenance trusts (used where funds are being set aside for minor beneficiaries such as grandchildren).

There is no rule against perpetuities for a Jersey trust, and a Jersey trust may continue in existence for an unlimited period. There are no registration requirements for Jersey trusts.

A Jersey trust may have non-Jersey individuals or entities as trustees, and there is no Jersey tax for non-resident beneficiaries on capital gains, bank interest from Jersey-based accounts and non-Jersey sourced income.

Private trust companies are commonly used in Jersey and are subject to lighter regulation than professional trust companies.

The latest amendment to Jersey's trust legislation came into force on October 25, 2013, strengthening the territory's legislative framework and providing greater clarity for the courts, practitioners and those who work with or benefit through Jersey trusts.

The effect of Trusts (Amendment No. 6) (Jersey) Law 2013 is to confirm the Royal Court's ability to provide discretionary relief in a number of trust scenarios, e.g. where a settlor has made an error in settling assets into trust, or where a trustee has erred in exercising a power, perhaps failing to take into account matters which should have been considered, or acting on incorrect professional advice.

In June 2009, Jersey's Privy Council approved an order allowing Foundations to be set up in Jersey.

Foundations have a long history in continental Europe. In medieval times they were used for charitable or religious purposes. They are now commonly used for wealth management, and residents of jurisdictions like the Middle and Far East are more familiar with foundations than with trusts, which do not exist in their legal systems. Jersey is the first of the Crown Dependencies to bring in a genuine foundation product.

There has been a steady stream of interest in Jersey’s foundation law since its introduction. By April 2013, the number of foundation structures registered in Jersey had breached the 200-mark. Around a third of these have been formed for philanthropic or charitable purposes, with a further third being used specifically by ultra-high-net-worth families as wealth and inheritance planning structures. Foundations are also being used for commercial purposes, for holding high value or luxury assets.


Relative to specialist insurance jurisdictions like Bermuda and Guernsey, Jersey’s insurance sector is small. However, supported by a flexible legislative regime and a wide range of expertise and ancillary support services, it is a sector that is growing.

The Insurance Business (Jersey) Law 1996 ensures that the insurance supervisory regime in Jersey is in accordance with best international practice and standards whilst at the same time recognising the need to adopt a flexible approach to the authorisation and regulation of the different types of insurance business being undertaken in Jersey. For example, Jersey was the first international finance centre to introduce the concept of the incorporated cell company (ICC) into legislation in 2006 alongside an enhanced version of the traditional protected cell company (PCC).

The new ICC involves the formation of separate, legally recognised cells within the overall structure, with each cell established as a separate incorporated Jersey company. This is in contrast to the traditional PCC where all the cells combined create one legal entity and each cell is not treated as a separate legal personality.

Jersey also permits the formation of ‘pure’ captive insurance companies for larger entities looking to self-insure, and reinsurance companies.

Jersey has chosen not to seek equivalence with the EU Solvency II insurance regulation, but follows the international standards set by the International Association of Insurance Supervisors.

Transparency and Information Exchange

Jersey, like the other UK Crown Dependencies, decided early on that it was better to cooperate with the likes of the OECD, the EU and other plurilateral groups in their efforts to ‘clean up’ the world of offshore than to resist. And it is a policy that has paid dividends. Jersey is consistently ranked as one of the most transparent and cooperative jurisdictions (some argue that it is now more transparent than the UK and other ‘onshore’ financial centres), and its reputation as such has helped to draw in business across a variety of sectors from all over the world.

In July 2013, Jersey was congratulated by the OECD for the measures it has taken in support of international transparency. In a letter to Jersey’s Chief Minister, OECD Secretary General Angel Gurria made particular reference to the joint statement issued by the Crown Dependencies on June 15, 2013, in which the Island committed to join the pilot initiative of multilateral automatic tax information exchange launched by the UK and four other EU Member states, to publish an action plan on beneficial ownership and to join the Multilateral Convention on Mutual Administrative Assistance in Tax Matters.

Jersey currently holds a central register of beneficial ownership of companies, and companies and trusts are required by statute to maintain up-to-date and accurate information on the ownership of those for whom they act. All the information held in the Island is available to tax authorities and law enforcement agencies on request.

Jersey has also expressed support for the OECD’s new single global standard for the automatic exchange of information between tax authorities worldwide, which was unveiled on February 13, 2014.

Furthermore, Jersey has completed automatic tax exchange agreements with the United States and with the United Kingdom, committed to join the OECD Multilateral Convention on Mutual Administrative Assistance in Tax Matters and completed 34 TIEAs and 8 DTAs. 

Jersey also moved to tighten its anti-money laundering law in 2013 to align the Jersey Order with certain revised recommendations from the FATF.

Further Reading

Further detailed information about Jersey’s tax and offshore business regimes can be found in the Jersey Knowledge Base of www.lowtax.net. Additionally, you can keep up to date with the latest developments affecting Jersey’s financial centre by visiting our partner website, www.tax-news.com.


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