MAYER & RISER, PLLC ATTORNEYS AT LAW HIGHLANDS, NORTH CAROLINA (828) 526-3731 OFFSHORE JURISDICTIONS Jersey

Overview

Over 100 miles off the English coast and just 14 miles from the French one, Jersey is the largest of the Channel Islands. The island is a self-governing British crown dependency.  Approximately 85,000 people live on this 45 square-mile island.  The principal language of Jersey is English.  It is reachable by air and sea from London, Paris, and many other European towns and cities with many daily flights to its modern airport.  In addition to being a popular beach resort, Jersey is a mature, respected offshore financial center with a strong international reputation.  In fact, Jersey is perhaps the classic "offshore" financial center.

Jersey has its own elected parliament, known as The States of Jersey. Jersey has been more-or-less independent from the United Kingdom since 1210.  It is essentially autonomous in all matters except foreign affairs and defense.

Jersey is a very politically stable jurisdiction.  It benefits from its relationships with the United Kingdom and the European Union (the "EU").  Since 1992, Standard & Poor's has determined that the obligations of debt issuers in Jersey are subject to the United Kingdom's AAA sovereign rating ceiling.

Jersey is also very economically stable.  The pound sterling is the official currency with Jersey issuing its own notes and coins at par with the British pound sterling. Unemployment levels are very low and Jersey has no public debt, and in fact has substantial cash reserves of nearly a half billion dollars - nearly a year's worth of tax revenues.

Jersey's specially negotiated status with the EU provides that EU law applies only to a limited extent, and does not apply with regard to fiscal and tax policy.  It has always had favorable taxation. There is no estate or gift tax, no capital gains tax, no corporate franchise tax, no value added tax (VAT), and no withholding tax on interest or dividend payments to non-residents. The income of residents is taxed at 20 percent.

Jersey is not just a major offshore financial center, it is one of the world's premier financial centers. Jersey's financial services industry boasts a top- tier client list served by a highly educated and affluent workforce.

Jersey's service providers offers a wide range financial services, from banking and fund management to custodial and fiduciary services. Over 90 percent of the banks in Jersey are ranked in the world's top 500 banks by size of balance sheet.  Well over $160 billion is held on deposit in Jersey's 79 banks.  Most of the world's leading banks and investment institutions have offices in Jersey.

Jersey is also a major jurisdiction for offshore investment funds. There is well over $60 billion under management in 88 fund management firms.  The island also has a very well established offshore trust and offshore company sector, with well over 30,000 companies registered.  There are over one hundred trust companies in Jersey, ranging from small boutique companies to those associated with major international banks.  Most of the major international accounting firms (e.g., Ernst & Young, KPMG, etc.) have substantial offices in Jersey.

Jersey's financial industry is tightly regulated.  All financial institutions are rigorously and continuously monitored.

In 1998, the Channel Islands Stock Exchange was launched in Guernsey; a joint project aimed at further increasing the competitiveness of the region. Jersey also consolidated its financial supervision and regulation with the launch of the new Financial Services Commission (FSC). The FSC oversees supervisory, promotional and developmental functions.

Advantages

  For the international investor, Jersey's advantages include:

• Financial services of the highest caliber
• Security and confidentiality
• Government committed to supporting international financial activities. 
• Strong economy. 
• Long-term stability and independence. 
• No exchange control restrictions, so capital can be freely moved in and out without formality
• No local estate or gift taxes
• No local capital gains taxes
• No local income tax liability for non-resident individuals and companies, and no value added tax (VAT) for anyone
• Excellent world-wide communications links

Jersey Trusts

Jersey law allows for the creation of "self-settled spendthrift trusts," often commonly referred to as "asset protection trusts."  A person (called the "settlor") can transfer assets to a trustee under a trust agreement to which the law of Jersey applies, and under which the settlor has retained the right to receive distributions of income and principal in the discretion of the trustee.  The trust agreement can provide that, if the settlor becomes bankrupt or is liable to a judgment creditor, the trustee can cut off the settlor's rights to distributions, thereby preventing the trust assets from being used to satisfy the settlor's debts.

Because Jersey has no specific asset protection legislation, it is sometimes overlooked as a trust jurisdiction.  However, with the recent bad publicity regarding some of the jurisdictions which have enacted specific asset protection legislation, e.g., the Cook Islands and the Cayman Islands, it may be prudent to form trusts in a jurisdiction such as Jersey, the law of which offers protection, but which is not really thought of as an "asset protection jurisdiction."

For more information about offshore planning opportunities in Jersey, contact Chris Riser at (828) 526-3731.