Jersey, a 45-square-mile island off the coast of France, falls subject to the British monarchy, but retains complete financial and political autonomy. Capitalizing on gray areas in the country’s laws, Jersey legal minds exploited gaps in revenue codes in the 1950s, beginning with the absence of inheritance tax, a chunk that exceeded 80% of a decedent’s wealth in Britain. As deposits from wealthy individuals filled the nation’s coffers, the revelation that most any tax could be avoided in Jersey brought the banking business to roost on the island, giving birth to one of the most popular offshore destinations for U.S. dollars, rubles, yen and other global currencies.
Jersey Individual Taxes
With respect to offshore accounts, no registration of trust accounts is required among the companies that administer individual financial accounts on the island. While the Jersey Financial Services Commission (JFSC) maintains that the trusts face strict regulation in fund sources, ownership, beneficiaries and anti-money laundering provisions, high measures of privacy surround the accounts.
JFSC officials who entered into cooperative agreements fostering disclosure with the United States and the United Kingdom contend that the confidentiality associated with the trusts equate with standards afforded to any other financial accounts. To combat tax fraud or money laundering, banks require significant documentation regarding the source and nature of deposits, such as sales contracts from real estate or business transactions and proof of income from employers.
Income tax rates of 20% apply to high-net-worth individuals establishing residency in Jersey. Those prospective residents, to whom a limited number of opportunities are available, must contribute at least £125,000, or about $167,250, annually and meet minimum income requirements of £625,000, or about $836,250. Income that exceeds the minimum is subject to an additional 1% tax.
Jersey Corporate Tax Structure
In 2008, Jersey eliminated all taxes for corporations doing business on the island, with the exception of financial services firms, which are taxed at 10%, and utilities, rentals and development projects, which are all taxed at 20%. As of 2016, there were 33 banks, with deposits of about $155 billion, licensed to operate in Jersey. Among the banks that conduct business in Jersey are Citibank, the U.S. consumer division of Citigroup Inc. (NYSE: C), and Credit Suisse Group AG (NYSE: CS), the Zurich, Switzerland-based multinational financial services firm.
Many of the Channel Island's residents work in the financial services field. No taxes are levied against capital gains or capital transfers, but a 5% tax on goods and services was implemented in June 2011. Additionally, a stamp duty of up to 9% applies to the transfer of immovable property within the nation’s borders, and its individual parishes collect property taxes.