Jersey tax system: audit, reporting and optimization of taxation of Jersey companies and individuals: VAT, income tax and capital gains
Basic taxes (briefly)
|Corporate tax (in detail)||The corporate income tax rate is 0%, with a few exceptions when the tax rate is 10% or 20%.|
|Capital gains tax. Details|
|VAT. Details||Sales tax on goods and services. Similar to VAT. The tax rate is 5%.|
|Other taxes||Social contributions|
|Stamp duty||Charged in relation to real estate transactions at various rates.|
International tax agreement
|Australia, Cyprus, Denmark, Estonia, Faroes, Finland, France, Germany, Greenland, Guernsey, Hong Kong, Iceland, Isle of Man, Liechtenstein, Luxembourg, Malta, Mauritius, New Zealand, Norway, Poland, Qatar, Rwanda, Seychelles, Singapore, Sweden, the United Arab Emirates, and the United Kingdom.|
|Australia, Austria, Argentina, Belgium, Brazil, Canada, China, Chile, Czech Republic, Denmark, Faroe Islands, Finland, France, Germany, Greenland, Hungary, India, Indonesia, Ireland, Iceland, Italy, Japan, Latvia, Mexico, Netherlands, New Zealand, Norway, Poland, Portugal, Republic of Korea, Romania, Slovenia, Turkey, Sweden, Switzerland, South Africa, UK, USA.|
Personal Income Tax
Personal income tax is levied on worldwide income of residents and ordinarily residents, Jersey-source income and any non-Jersey-source income of residents (not ordinarily residents), and Jersey-source income of non-residents. Taxable income comprises trading profits, employment income and taxable benefits, investment income, foreign securities income, foreign possession income and income from other sources. Jersey resident shareholders may be taxable on loans made to them by Jersey resident companies in which they directly or indirectly own shares. Jersey resident shareholders of Jersey resident companies (or nonresident companies with a Jersey permanent establishment) are subject to specific anti-avoidance rule in respect of certain distributions from such companies that may have otherwise been treated as nontaxable capital receipts rather than taxable income. The rate of personal income tax is 20%. A special regime applies for high net worth individuals, which is available only upon application; if accepted, the rate of tax is reduce to 1% on on income over GBP 625,000 (excluding Jersey property income). For individuals, tax year is a calendar year. Where a return is filed by a tax agent, the filing date is the last Friday in July following the tax year. Where a return is not filed by a tax agent, the filing date is the last Friday in May following the tax year. A GBP 250 penalty is levied if a tax return is filed late (however, the penalty cannot exceed the tax liability for the relevant period).
Corporate income tax is levied on worldwide income of resident companies and Jersey-source income of nonresident companies (excluding certain statutory and non-statutory exemptions, which include Jersey bank interest). Resident companies are taxable on income from trading activities and from real state situated in Jersey or elsewhere. Expenses incurred in the course of generating a company’s income generally are deductible. A Jersey company is regarded as resident in Jersey and therefore liable to Jersey income tax at 0% unless it undertakes either certain classes of financial services business (in which case the applicable income tax rate is 10%) or it undertakes certain utilities business in Jersey or real estate activities in Jersey (in which case the applicable rate is 20%). However a company is not regarded as resident in Jersey if its business is centrally managed and controlled outside Jersey in a country or territory where the highest rate at which any company may be charged to tax on any part of its income is 20% or higher, and the company is resident for tax purposes in that country or territory.
Capital gains tax
Capital gains are not taxed in Jersey.
Net dividends received are taxable as a part of corporate income.
Losses may be carried back one year by “utility companies” and carried forward indefinitely by all companies.
The tax year for corporations is calendar year.
The States of Jersey introduced a broad based Goods and Services Tax (GST) as from 6th May 2008 – The Goods and Services Tax (Jersey) Law 2007. GST is a sales tax on domestic consumption of imported and local produced goods and services, the current rate is 5%. Some supplies may be zero-rated or exempt.
GST registration generally is required for all entities that made taxable supplies of GBP 300,000 or more in the last 12 months or that expect to exceed such an amount in the next year. A special regime is applicable to "International Service Entites" or ISE whose activities are predominantly undertaken outside Jersey. ISE status removes the entity from the scope of the GST. ISE status can be obtained by a Jersey Trust company through an annual registration and payment to the Comptroller of Income Tax who will maintain a list of ISE’s.
GST tax period and returns
GST filing and payments are due quarterly. The GST return and payment is due one month after the close of the applicable quarter.
Dividends, interest, and royalties paid by a company to a resident or nonresident are not subject to withholding tax.
Stamp duty applies at rates ranging from 0% to 5% on the purchase or transfer of Jersey real estate. Mortgages secured by a charge over Jersey real estate are subject to stamp duty at rates up to 0.5% of the amount borrowed.
There is an annual return fee of GBP150 in Jersey. It must be paid by the 28th February each year.
Other taxes and duties
|Real property tax||imposed on both the owner and occupier of land and buildings within the Island. Transfer tax||applies on the transfer of shares in companies the ownership of which confers a right of occupation of real estate located in Jersey. The amount of land transaction tax payable is equal to the amount of stamp duty that would have been suffered had the real estate been held directly rather than through a company. Social security contribution||employers are required to make social security contributions on an employee’s earnings at a rate of 6.5%, employees are required to make social security contributions at a rate of 6% of their monthly remuneration. The maximum social security contribution base is GBP 3,834. The additional 2% rate applicable to employers (earnings between GBP 3,834 and GBP 12,686) does not apply to employee contributions.|
Transfer pricing: No Thin capitalization: No Controlled foreign companies: No General rules: A general anti-avoidance provision allows the Tax Office to raise additional tax assessments where a transaction has been entered into, the main purpose, or one of the main purposes, of which is the avoidance or reduction of Jersey income tax. Doclosure requirements: Companies are required to disclose in their annual tax return the names of any Jersey resident individual shareholders who hold more than 2% of the ordinary share capital of the company and the names of any Jersey resident legal entity shareholders (irrespective of the extent of the shareholding).
Double Tax Agreements
Jersey has entered a whole range of double tax and tax information exchange mechanisms:
- 15 DTCs: Estonia, Guernsey, Сyprus, Hong Kong (China), Isle of Man, Luxembourg, Mauritius, Malta, Poland, Qatar, Rwanda, Serbia, Seychelles, Singapore, United Arab Emirates, United Kingdom. 40 TIEAs: Argentina, Australia, Austria, Brazil, Canada, China, Chile, Czech Republic, Denmark, Estonia, Faroe Islands, Finland, France, Germany, Greenland, Iceland, India, Indonesia, Ireland, Italy, Japan, Korea (Republic of), Latvia, Mexico, Netherlands, New Zealand, Norway, Poland, Portugal, Réunion, Slovenia, South Africa, Sweden, Switzerland, Turkey, United Kingdom, United States.
Foreign exchange control
There is no exchange control in Jersey.
Every company is required to maintain accounts, which may be held in any location, although in the case of public companies certain information must be available in the Island. A private company is not required to file accounts with the registrar. The form and content of company accounts is not specified in the Law but companies must prepare accounts in accordance with generally accepted accounting principles. A public company's accounts are required to be available to the public and filed with the Registrar. For private companies it is sufficient that accounts are available to shareholders.
There is no requirement that the accounts of a private company be audited. An audit is, however, required if the company is a public company, or if required by a company's Articles of Association or if a resolution of members so requires. An audit must be carried out by suitably qualified persons as specified in the Law. An auditor is given certain powers and has certain duties to fulfil. It is an offence to make false statements to auditors. A public company must deliver a copy of its audited accounts to the registrar of companies within 7 months after the end of the financial period covered by the accounts.
Generally speaking, Annual Return is a short review on the current state of the company, which is prepared by the company secretary annually. As a rule it includes the following information:
- Incorporation information (registration date, registered address); Information about directors and their resignation; Information about secretaries and their resignation; Information about registered capital, nominal value of shares and amount of issued shares; Information about shareholders and share transfer.
Company tax returns must be filed with the Tax Office by the last Friday in July following the tax year. Companies that file their Jersey tax return after the filing deadline are subject to a GBP 250 penalty. Any tax outstanding in early December in the year following the tax year is subject to a one-time 10% surcharge.
Taxes of Jersey
|Min. rate for corporate tax||0%|
|Capital gains tax||No|