There are many reasons why a private individual or corporate entity might incorporate a company in Jersey. Paul Lees Head of Private Client explains the advantages and uses for incorporating a company in Jersey, as well as the varying types of companies that can be created.
A company is a legal entity established (incorporated) by an individual or group to operate a business. It has its own legal personality and many of the same legal rights and responsibilities as a person, such as:
A whole range of private individuals, families and corporations from around the world have found a use or rational for incorporating a Jersey company. Some of the fundamental advantages of using a Jersey company for non-residents include:
Thousands of companies are registered in Jersey which are owned directly by individuals, or by Trusts for the benefit of individuals. Below are some of the most popular uses and benefits:
Background: Mrs Foster is 69 and lives in the UK. She has five grandchildren who live in different parts of the world and wants to ensure that as part of her estate planning, she leaves them with a lasting legacy one that works to make the most of her accumulated wealth.
Objective: Mrs Foster is keen to ensure that her legacy is properly managed from a well-regulated tax neutral jurisdiction with a good range of investment solution providers to invest part of her savings. She is keen to delegate some of the responsibility now that she is getting older.
Solution: Mrs Foster establishes a discretionary trust in Jersey. After receiving the appropriate tax advice, she then requests the Trustees to incorporate an underlying Jersey Company to hold a discretionary investment portfolio to invest her savings, providing an extra layer of fiscal protection.
It is not just individuals who incorporate Jersey Companies. Increasingly businesses are incorporating related companies in Jersey as part of their strategy to facilitate a variety of specific transactions outlined below:
Background: Bricksit Ltd is a UK registered company involved in the development and construction of large projects from around the world. They have recently won a contract to build a new football stadium in the Middle East.
Objective: Bricksit Ltd is keen to reduce the public visibility of its profits and keep the information private from its competitors. It is also keen to find a way to pay ex-pat employees contracted to work on the stadium project from a tax neutral jurisdiction.
Solution: Bricksit Ltd incorporates two Jersey companys. One is used to facilitate its payroll to pay the salaries of its ex-pat employees so they are not subject to local income taxes. The other Jersey company is established to enable sensitive information regarding its profit to be kept private from its competitors.
There are several different types of Jersey Companies available.
Jersey has recently created new laws, to satisfy the drive by the EU to ensure ‘relevant businesses’ in all jurisdictions meet minimum ‘economic substance requirements. These laws apply to Jersey companies undertaking the following activities:
Such companies must demonstrate they are managed and controlled in Jersey and that their core income-generating activity is conducted in Jersey (or that they have the capability to monitor such activity carried out on their behalf). They must also have adequate people, premises and expenditure in Jersey.
Companies that are subject to the new substance rules will also be required to disclose additional information in their annual tax return. Those that are undertaking a relevant activity will be subject to penalties if they are found to have inadequate economic substance.
Further information on the new Jersey Economic Substance Law can be found here.
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Fiduchi is a regulated provider of trust and company services, and therefore its experts are able to assist you in all aspects of ensuring continued compliance in the constant changing landscape. At Fiduchi we take a pragmatic approach to ensure your interests, whether personal or business, are safeguarded. Because of this, we don’t apply a ‘one size fits all’ methodology, rather the contrary. Our director led teams will assess your needs to ensure we take into consideration all your requirements and provide the bespoke service you require.