Underlining its commitment to its investment fund and finance industry, Jersey has passed an amendment law to provide an explicit statutory exemption from any liability to tax in Jersey for investment funds and certain capital markets issuers.

Investment funds and capital markets issuers are currently not liable to tax on their income or profits in Jersey, as they are nil-rated for tax. However, the Income Tax (Amendment No 36) (Jersey) Law 2010, which has just entered into force, provides additional clarity in relation to the tax treatment of investment funds, their investment holding companies as well as certain categories of capital markets issuer (eg, securitisations and repackaging vehicles) in Jersey.

The following are eligible for exemption:

  • arrangements for the collective investment of capital acquired by means of an offer of units for subscription, sale or exchange (the exemption is available for both investment funds as well as any subsidiary investment holding companies); and
  • transactions whose principal purpose is the securitisation or repackaging of assets and which involve the issue of securities, together with such other categories of capital markets transaction as may be approved.

Participants in eligible schemes simply need to register with the comptroller of income tax by March 31 each year in respect of the preceding year of assessment and pay an annual fee of £500. On registration, the profits of registered participants will be certified as exempt from income tax in Jersey.

Jersey's constitutional autonomy is such that the island's government is fully empowered to enact directly in relation to legislation on tax without reference to the United Kingdom, the European Union or any other external authority. The purpose behind the amendment is to reinforce Jersey's commitment to maintaining its position as a long-term, stable platform for the set-up and operation of investment funds and capital markets transactions.

For further information on this topic please contact Niamh Lalor at Ogier by telephone (+44 1534 504 000), fax (+44 1534 504 444) or email ([email protected]).