Jersey, a 45-square-mile island off the coast of France, is subject to the British Crown but has total financial and political independence. For centuries, the island has utilized its autonomy and unique constitutional connection with Great Britain to retain a certain level of financial independence, and profiteers have taken advantage of Jersey’s tax regulations for almost as long.
Jersey drew the attention of British authorities as early as the late seventeenth century as a centre for worldwide smuggling, but Britain was unable to bring the island’s administration to heel.
- Since the 17th century, Jersey has been utilized for international smuggling.
- Because of the absence of taxes, wealthy Britons relocated or transferred their fortunes.
- Jersey residents are subject to a 20% income tax.
Jersey initially earned a reputation as a tax haven in the 1920s, when rich British citizens started relocating to the island, or, in many instances, just transferring their fortune to the island, to take advantage of the territory’s absence of wealth and inheritance taxes.
The Jersey government imposed a 2.5% income tax in 1928. During the German occupation of the Channel Islands, the income tax was increased to 20%, where it remains today, however there is no inheritance, wealth, corporation, or capital gains tax on the island. As affluent individuals’ deposits flooded the country’s coffers, the discovery that almost any tax could be avoided in Jersey drove the banking industry to the island, giving rise to one of the most popular offshore destinations for US dollars, rubles, yen, and other worldwide currencies.
Jersey Individual Taxes
In terms of offshore accounts, no trust account registration is necessary among the firms that manage individual bank accounts on the island. While the Jersey Financial Services Commission (JFSC) says that the trusts are subject to tight regulation in terms of financial sources, ownership, beneficiaries, and anti-money laundering rules, the accounts are very private.
JFSC officials who have signed into cooperation agreements promoting transparency with the US and the UK argue that the trusts’ secrecy is comparable to that of any other bank account. Banks demand considerable paperwork confirming the source and purpose of deposits, such as sales contracts from real estate or commercial transactions and evidence of income from employers, to prevent tax fraud or money laundering.
High-net-worth persons obtaining residence in Jersey face income tax rates of 20%. Prospective residents must pay at least £145,000 per year, or around $159,900 in 2021, and must fulfill minimum income standards of £725,000, or approximately $799,480. Any income beyond the minimum is subject to an extra 1% tax.
Jersey Corporate Tax Structure
Jersey abolished all corporate taxes on the island in 2008, with the exception of financial services enterprises, which are taxed at 10%, and utilities, rents, and construction projects, which are all taxed at 20%.
Jersey has 24 banks authorised to operate as of 2021, with deposits totaling about $138 billion. Citibank, Citigroup Inc.’s U.S. consumer subsidiary, and UBS AG are among the banks that do business in Jersey.
Many Channel Island inhabitants work in the financial services industry. There are no taxes on capital gains or transfers, but a 5% tax on goods and services was established in June 2011. Furthermore, a stamp fee of up to 10.5% is levied on the transfer of immovable property inside the country’s boundaries, and property taxes are collected by specific parishes.
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