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Investing
in Jersey
Situated 100 miles south of the British coast, Jersey
boasts a population of 87,000 and is one of the leading
global offshore centres, where financial services make
up 60 per cent of the local economy.
Jersey is not strictly part of the UK although it has
been governed by the crown as a separate possession for
the past 800 years, and all islanders are classed as British
citizens. Its legal system is based on both English law
and Norman customary law and is administered by the island’s
Royal Court.
Queen Elizabeth II is the Head of State and the UK represents
the island in all foreign affairs including defence, but
Jersey does retain autonomy on domestic issues, negotiating
directly where foreign matters pertaining directly to
the island are concerned. However, it is currently taking
steps to become a full member of the Commonwealth within
its own right.
The island is not represented in British parliament but
instead has own government known as the States of Jersey
whose members are elected from the residents and comprise
53 elected members, of which there are 50 who are able
to speak in the house as well as cast their vote, and
three other members who may speak but are unable to vote.
As far as the rest of Europe is concerned, Jersey is classed
as ‘special territory’ which is part of both
the UK and European Union, along with the common customs
territory. However it is considering its position as far
as the Eurozone goes and, should the UK decide to adopt
the Euro at some point in the future, Jersey may decline
and opt instead to maintain the pound on its own.
Tax
In recent years Jersey’s financial services industry
has contributed a major part of the island’s tax
revenue.
In May 2006, Jersey’s Treasury Department published
its proposals for two main elements of the reforms which
have the effect of shifting the tax burden from the Island’s
financial services industry to its resident population.
In deciding on their fiscal policies, the States of Jersey
were acutely aware of the danger of losing existing or
future business if the Island were to be perceived as
uncompetitive.
Tax in Jersey is, in most cases, lower than the tax rates
imposed upon UK residents and because of this, many shrewd
investors are using Jersey as a tax haven for their income
and investments.
Jersey residents holding shares in investment companies,
under the new rules that will be introduced in 2008, will
be taxed proportionate to the gross profits of the company,
with no deductions for interest or management expenses.
Those with shares in trading companies will only be taxed
where profits are retained in the company in excess of
three years at a rate of 20 per cent of the shareholder’s
marginal rate of income tax.
Jersey has provided an increasingly diverse range of services
in the banking, fund and trust sectors to personal and
corporate clients.
The long tradition of using company structures to enhance
the financial planning of individuals, families and companies,
remains.
In more recent years, the experience gained by Jersey
professionals in helping to create bespoke investment
solutions for private clients living across the globe,
has been turned towards increasing amounts of institutional
and corporate business.
Investing and banking
Jersey remains a leading global centre for banking services
designed especially for expatriates and private banking
clients seeking asset protection and wealth management
in a tax benign location.
There is a growing appetite for sophisticated investment
solutions in the marketplace and Jersey based practitioners
are actively moving to re-package ‘traditional’
corporate and institutional type investment products to
meet the requirements of these more sophisticated private
clients.
The investment industry has explored the potential that
exists in markets such as Asia and the Middle East.
The industry believes it has opportunities to forge business
links with China and Hong Kong, particularly in the area
of raising capital and channelling inward foreign investment.
Chris Blampied, Managing Director of the Royal Bank of
Canada (Channel Islands) Limited and Head of Banking,
British Isles believes that Jersey has a lot to offer
expatriates and international investors.
He commented: “What investors are looking for is
an environment where they can place their hard earned
cash that is stable with good regulation, somewhere where
there is a good financial infrastructure with good legal
and financing firms.
“In terms of Jersey, it has good financial aspects
for international investors and, of course, the island
is a lovely place for investors to come and visit their
money.
“I think that once you look beyond what the island
can offer as a whole, you can see what the individual
banks can offer and many of them have developed a lot
recently in terms of technology and financial products.”
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