Contributed By Mourant
Under the Income Tax (Jersey) Law, 1961, the income of a charity will be exempt from Jersey income tax as long as the charity is formally registered as a charity in accordance with the provisions of the Charities (Jersey) Law 2014.
There is also tax relief for donors to Jersey charities to the extent they are liable to Jersey income tax.
The Jersey income tax position in respect of charities therefore encourages both the establishment of and donations to charities.
The most common structures used for charities in Jersey are trusts, companies limited by guarantee and foundations.
Charitable-purpose trusts can be set up for any charitable purpose and can be established for an unlimited duration. Whilst the trustees may change over time, the trust will continue to exist indefinitely (and until terminated). Trusts, however, are not recognised in all jurisdictions and have no separate legal personality from their trustees.
Companies limited by guarantee are popular because they provide a separate legal entity which is a well-known, registered structure which third parties (such as lenders) are generally comfortable dealing with. A company also provides continuation as the company will not cease to exist unless wound up or struck off.
Like a company, a foundation has separate legal personality from the founder or members of the council and can continue indefinitely. A foundation is ownerless and has no shareholders. Although foundations are registered, there is limited information available publicly. Clients in civil-law jurisdictions are particularly comfortable with foundations, as they have been used in civil-law jurisdictions for philanthropic purposes for centuries.
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