Jersey is situated in the English Channel, near the Cherbourg Peninsula. At its closest point, Jersey is approximately 15 miles from France. The Island is well served by both daily ferry links to the United Kingdom and France, and there are regular air services connecting with most UK airports, Paris and Zurich. Flying time to London and Paris is less than one hour. The official resident population is approximately 85,000.

As the “senior” offshore jurisdiction, Jersey has enjoyed, with the exception of occupation during World War II, 800 years of continuous political, social and economic stability. There are no political parties and for many years all of the Island’s capital expenditure has been financed out of current income. Other attractions of Jersey as an offshore financial centre include:

Allied to the English Crown since 1066, Jersey enjoys a unique self-governing status. While the UK retains responsibility for the Island’s defence and foreign relations, Jersey is self-governing as to most other matters. Political links with the UK are maintained through the Lieutenant Governor as the personal representative of the Queen.

The Island’s legislature is “The States of Jersey” with the administration of the Island’s affairs being carried out by The Committees of the States. The Committees in many instances have powers very similar to those of Ministers in the United Kingdom Government.

The sources of law in Jersey are customary law, legislation and judicial decisions. Modern law, such as company and trust law, are based on Anglo-Saxon concepts. If precedent is required in these areas the Jersey courts will refer to English court decisions. The final court of appeal for cases arising in Jersey is the Privy Council. The Jersey tax system is entirely independent of the UK’s tax system. With the exception of a tax treaty with the UK, Jersey is not a party to any tax treaties. Jersey also is not covered by any tax treaties to which the UK is a party.

Jersey is not a member of the European Union. However, Jersey products enjoy free access to the Union. EU tax harmonisation policies do not apply to Jersey.

Due to its unique status, Jersey has developped its own body of data protection laws that are independent from the UK’s and the EU’s. This should give better protection to businesses in the light of recent intercept controversies by some intelligence agencies and also by requests that are being made by certain governments to Internet companies such as hosting and Internet service providers to hand over private and business data.

Jersey enjoys the enviable position of having no national debt. The major sector of the economy is the finance industry with investment and trust management having a value in excess of £300 billion. Tourism is the second most important industry followed by agriculture and horticulture together with a small amount of light industry. There is virtual full employment due to continued immigration over the last 30 years. Various restrictions have been imposed to prevent the unfettered growth of local business and immigration.

There are approximately 80 major banks in the Island including most French and Spanish banks having a presence, together with a highly sophisticated infrastructure of accountants, lawyers, trust companies and stock brokerage firms. All major UK banks maintain full service operations in Jersey with the ability to handle most international commercial transactions. Jersey uses the Pound Sterling together with its local notes and coins as currency. There have been no exchange controls in Jersey since the UK abolished exchange controls in 1979. Given the current EU policies against restrictions on capital flows, there appears little prospect of any re-imposition of exchange controls.

The registration and control of Jersey incorporated companies is governed by the Companies (Jersey) Law 1991. Companies may be formed in Jersey for trading, investment and all other activities which can be carried out by a natural person. There is no longer a need to have a specific objects clause inserted at the head of the Memorandum of Association. Companies can be incorporated as a Public or a Private Company. A Public Company is one:

A Private Company is any company which is not a Public Company. Jersey incorporated companies may obtain a listing on the Stock Exchange in London, and on any other Stock Exchange around the world provided that it complies with the requirements of the relevant exchange. Relatively little Case Law has developed in Jersey arising from company matters, but it is recognised that where there is a lack of Jersey case law, UK precedents would be followed.

The principal features of Jersey incorporated companies include:

Disclosure of Beneficial Ownership

The ultimate beneficial ownership of all Jersey companies is disclosed to the Financial Services Department at the time of incorporation. If the owner is a trust, details of settlers, trustees and beneficiaries must be disclosed. If the ultimate beneficial owner is a public company, a copy of the most recent annual report has to be submitted. If the beneficial owner is resident outside Jersey and the UK, the Registrar will not disclose such information to any other department, individual or foreign government agency. In other cases information will be given to the Jersey Income Tax Office and available to the UK Inland Revenue under the exchange of information agreement with the UK

All changes in beneficial ownership must be advised to the Registrar.

All Jersey companies will be subject to Jersey tax unless they make a claim for Exempt Company status or apply to be a Jersey incorporated International Business Company (IBC).

An Exempt Company is one which has:

Under the Exempt Company regime the place of management and control of a Jersey Company is not relevant in determining its tax status in the Island. A company incorporated outside Jersey but controlled from Jersey will be considered resident for tax purposes but can also apply for exempt status.

Companies must file an Exempt Company election within 3 months of the date of formation with the Comptroller of Income Tax. In subsequent years the election must be filed by 31st March of each year. Failure to file an annual exemption claim may result in the Comptroller raising an estimated assessment to income tax.

An Exempt Company may become an Income Tax company and vice versa. However, further changes will not normally be allowed, and the second such change in status will only be approved in certain special circumstances. An example would be where a beneficial owner takes up residence in the Island and then leaves. Even in such cases, specific prior approval will have to be sought.

An International Business Company is one which has:

IBC status is available to a company incorporated abroad that wishes to hold board meetings in the Island without becoming liable to Income Tax on its income at 20%.

Disclosure of beneficial ownership to the Financial Services Department is a prerequisite of this procedure.

Branch of an overseas company IBC status is also available to the Jersey branch of a non resident company.

Companies that were in existence at the end of 1992 (and branches that have commenced trading before 1 January 1993) may not apply to become an IBC. If a company starts life as something other than an IBC it cannot switch to IBC status. An existing IBC that does not renew its status reverts automatically to being an “ordinary” Income Tax Company. The basic rule is that once IBC status has been lost it cannot be regained.

The IBC’s income is taxed on an actual basis, although in general assessments will be made by reference to the accounting period ended in the year of assessment. The company’s income derived from international activities, i.e. activities outside Jersey, will be taxed at the following rates:

By prior agreement with the Comptroller of Income Tax an IBC may deem a portion of its profits each year to arise in Jersey thereby allowing the IBC to pay total Income Tax any rate between 2% and 20% on its profits as may best suit the company’s purposes.

An IBC is not entitled or obliged to deduct tax when making payments of interest or dividends. Interest payments are deducted as trading or management expenses in calculating the profits chargeable to Income Tax.

A return of income will be sent to the IBC for completion in the January following the year of assessment. A return must be made within seven months of the end of the accounting period and tax paid within nine months of the end of the accounting period. The advance payment of Income Tax, £1,200 will be allowed as a credit against the eventual tax bill but no repayment will be made in the event that the company’s income results in lower tax than £1,200 being due.

A Jersey company which does not qualify as an Exempt Company or an IBC will be subject to income tax at 20% of its profits. This rate generally applies to companies that conduct business in the Island, or are partly or totally owned by residents of the Island.

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