Why move your business to Jersey?
It is a myth that businesses cannot relocate to Jersey unless those employees or owners who will be moving are each millionaires. The last few years have seen an increasing number of businesses relocate to Jersey. In particular the government is keen to attract natural resources and mining companies, e-gaming, e-commerce and intellectual property businesses.
The key factors which make Jersey so attractive include:
- zero rate of corporate tax for foreign owned businesses and low rates of personal taxation
- ability to centralise management and control in one place
- ability to demonstrate real substance in the jurisdiction
- modern and flexible legislation
- good supply infrastructure resources including office space and support services
- a broad base of professional service providers with high levels of expertise
- a skilled local work force
- a government which is willing and keen to encourage businesses to locate
- proximity to London and ability to deal with New York and Hong Kong in same business day and
- economic and political stability.
Both international businesses with a diverse geographical asset base and traditional London based companies are realising that for both key management employees and for the owners of the business it makes sense to relocate to a more attractive tax neutral jurisdiction.
Jersey has welcomed many new businesses over the past few years including mining and oil companies and fund managers, all of whom have been keen to take advantage of both the business friendly environment and the quality of lifestyle on offer.
Randgold Resources plc A FTSE 100 Jersey incorporated African focussed gold mining company which has opened an office in Jersey and relocated its senior management from London and elsewhere.
Consolidated Minerals A private global mining business which has relocated key personnel from Australia and South Africa.
Altis Partners Altis Partners - a top 20 performing hedge fund manager which has relocated all its principals and operations to Jersey.
Jersey Telecoms / Ekit Jersey Telecoms have recently acquired a business called Ekit which sells specialised SIM cards for mobile phones and which provides for cheaper roaming calls for users. As part of the deal the chief executive of Ekit is relocating to Jersey.
Heritage Oil plc Heritage Oil plc, a FTSE 100 oil company which has its main office in Jersey where its chief executive also lives.
Acrede Global Solutions Acrede is a payroll adminstration company which has set up its worldwide head quarters in Jersey and uses “cloud technology” to deliver payroll solutions worldwide.
Other businesses like CPA Global have been headquartered in Jersey for many years. CPA now employs over 300 staff in Jersey.
Jersey has all the infrastructure and expertise most businesses require with new office space under construction to add to that already available. Back office functions, IT, banking, compliance and accounting functions are all readily available. Local professional advisers operate in a manner that would be familiar to anyone working in London and work to high standards of client delivery.
Various organisations and authorities continue to scrutinise international finance centres and there are an increasing number of challenges being made by governments and revenue authorities to the integrity of structures. Therefore, it is becoming increasingly important for businesses to demonstrate proper substance in the jurisdiction not just with management and control but also with office space and employees. This is often not possible in other jurisdictions but is very easy to achieve in Jersey.
Jersey has recently amended its gambling legislation to permit and encourage e-gaming businesses to set up in Jersey. Jersey is now an attractive alternative to places like Gibraltar and businesses can benefit from better infrastructure and expertise along with the credibility associated with being in a well regulated jurisdiction.
Jersey already has modern laws relating to registered rights such as patents and trademarks. The new law will, when adopted in the coming few months, update older copyright and unregistered intellectual property rights such as database, publication and design rights.
As one of the consequences for the new law being introduced, the government in Jersey hopes to encourage businesses to relocate key staff and actively manage their regional or worldwide intellectual property portfolios from Jersey.
What if I do not have a Jersey Company?
Foreign companies can conduct business in Jersey and there is no requirement that a business be owned by a Jersey company. However, many businesses do incorporate a new Jersey company to hold or operate the business. Alternatively, it is often possible to migrate a foreign company to Jersey (click here for information on migrating) via a de-registration and re-registration process. Particularly with regard to English companies, it is often easier to relocate using an English scheme of arrangement or a straight forward share swap (where there are not many shareholders) and insert a Jersey holding company. Ogier has expertise in all these areas and will work with your local advisers to implement such structuring.
I did not think I could move to Jersey?
Jersey law does not prohibit foreign employees and owners from moving to and working in the Island or businesses setting up in Jersey. Jersey is not a member of the European Union but it does apply equivalent principles of freedom of establishment and free movement of EU citizens, subject to some local licensing requirements in relation to housing and businesses with a local physical presence. Non EU citizens will have to apply for a work permit under Jersey’s immigration laws which operate on the same basis as the United Kingdom. There are two key ways overseas employees or owners can move to and reside in Jersey:
In employing the professionals required for the operation of the business, where the required skill-set cannot be readily found in Jersey, an application can be made for the post to be filled by “essentially employed” individuals, which permits the business to recruit the necessary professionals from outside Jersey.
Such essentially employed professionals will also benefit from access to a wider range of quality housing accommodation than would otherwise be the case.
Individual employees residing in Jersey as a result of being “essentially employed” do not have to satisfy a minimum local income tax contribution. The factors taken into account in granting “essentially employed” status include the expected economic contribution of the employer through the employment of the employee and otherwise, and the qualifications of the employee. The Jersey authorities have demonstrated an increased willingness to grant “essentially employed” status to employees of new businesses that meet the criteria for establishing a presence in the Island. These individuals are subject to local income tax on their worldwide income at a headline rate of 20%.
High Net Worth Individuals
The regime for high net worth individuals is currently undergoing a review by the Government in Jersey ensuring Jersey remains a popular and competitive destination for such individuals.
For the high net worth individual principals of the business, as well as via the “essentially employed” route, approval for residency can be granted based on to the following criteria:
- likely contribution to Jersey tax revenues (at present this would be in the region of £125,000 per annum although the Population Office is also willing to take account of related employment creation opportunities);
- relevant business and social background;
- the number of dependants and the extent to which these persons may in time acquire local housing qualifications;
- the total net worth of the application;
- any other non-economic benefits for Jersey; and
- the associated establishment of a business in Jersey generating local tax revenues and providing employment whilst not adversely impacting upon local resources.
- The successful principal would generally be expected to purchase a Jersey property of at least £1,000,000 in value, although there are a limited number of houses and apartments available below this level which have appropriate states for occupation by such a person.
Whilst the general headline rate of Jersey income tax is 20%, banded headline rates apply for high net worth individuals under the present high value residency rules, as follows:
- Minimum annual contribution for all new residents is £125,000; and
- The first £625,000 is taxed at 20% with the balance being taxed at 1% on worldwide income.
One key factor is to have certainty of breaking previous tax residency on relocating.
Principals should obtain specialist tax advice for detailed worldwide tax planning and Ogier are delighted to make introductions on request.
Does my business need any licences?
As well as the relocating employees having to obtain consent to reside in Jersey, the business will also have to obtain approval to set up operations and will be granted a licence to occupy office space and employ up to a specific number of employees. Once the licence is granted, the business may employ as many or as few employees below such threshold number as it wishes. If further employees are required an application to increase numbers can be made at any time. The Jersey authorities will be looking to ensure that as many local candidates are identified for jobs as possible but they recognise the need to bring in specific expertise from outside Jersey as well.
Other licences may also be required if your business is conducting any regulated activity, such as investment management or insurance business.
The profits of most Jersey companies owned by non Jersey residents are subject to tax at a rate of 0% on their worldwide income. A higher rate of 10% applies to the income of a restricted sector of local financial services companies. This is known as the Zero Ten regime. There is no taxation of capital gains in Jersey.
In addition, should the Zero Ten regime be amended or not suitable for the business it may also be possible to structure arrangements in certain circumstances so that a tax ruling is obtained from the relevant authorities in Jersey to ensure minimal tax is paid in Jersey. However, the government in Jersey has stressed the importance of the Zero Ten regime and has publicly announced that it is seeking to amend the regime rather than change the regime by abolishing the zero rate of tax.
In contrast to other jurisdictions, Jersey social security contributions are capped for both employer and employee. Employer contributions are levied at 6.5% on the first £3,686 (per month) of salary and employee contributions are levied at 6% to the same salary level.
Jersey has a straight-forward personal tax regime. In addition to income tax there is a goods and services tax of 5% but there are:
- no wealth taxes;
- no capital gains taxes;
- no gift taxes; and
- no inheritance taxes.
Stamp duty is only payable on the acquisition and financing of Jersey property and a capped probate duty is payable on the registration of Jersey wills. There is no stamp duty generally in respect of the transfer of shares in a Jersey company (except local real estate transactions where property is owned through shares).
Jersey’s fiscal stability and tax certainty is demonstrated by the headline rate of income tax having remained at 20% since circa 1940. However, as set out above a separate regime applies to high net worth individual immigrants.
Jersey has excellent transport connections to the UK, Switzerland and France with regular daily flights and ferry services offering a wide number of routes. There are also flights to other European destinations. Flights by jet to Gatwick take 40 minutes and on average there are at least 12 flights to the Island every day from London (including London City). At 45 square miles Jersey also eliminates long commuting journeys with everything being no more than half an hour away.
Considerations for an Employee’s Family
In order to make any move successful it needs to be attractive not just for the business but also for relocating employees’ families.
Jersey has a very good healthcare system with a wealth of doctors, dentists and other medical practitioners. Crime is low and the streets are much safer than in the UK and other parts of the world.
The quality of the Island’s schools is very good and pupil / teacher ratios are low. The performance of pupils at Jersey schools is generally higher for GCSE and A-Level results than in the UK.
Quality of life is enhanced by beautiful, clean beaches and countryside and all the sports facilities you would expect with a particular focus on watersports as well as on mainstream sports such as football, rugby, cricket and golf.