Private Wealth 2020

Last Updated August 12, 2020

Jersey

Law and Practice

Authors



Mourant is a leading offshore law firm with expertise in Cayman Islands, British Virgin Islands, Jersey and Guernsey law. The firm's clients include many of the world's leading financial institutions, corporations, public organisations, private equity houses and investment funds, as well as ultra-high net worth individuals and family offices. Mourant Ozannes delivers partner-led advice on complex, multi-jurisdictional and often high-profile matters for clients looking for depth of expertise and a range of resources across Asia, Europe, Latin America, the Middle East and North America. The firm routinely works in partnership with the most prestigious international legal and accountancy firms. Mourant Ozannes' international trusts and private client practice brings together contentious and non-contentious work, enabling it to advise seamlessly on the appropriate jurisdiction in which to establish and administer private wealth structures and to work together without jurisdictional boundaries. The team also advises on trust and foundation law, including trusts holding private wealth as well as those used in the commercial sphere (eg, pensions and employee benefit trusts), and complex trust disputes.

Jersey does not have estate, gift, capital gains or lifetime transfer taxes. Its principal tax is income tax and, in addition, Jersey levies a goods and services tax (GST) on the sale of goods and services in Jersey. GST is charged at 5% on the majority of goods and services supplied in Jersey for local use, including imports. There is also a customs and import duty applicable on certain imports including alcohol, road vehicle fuel, tobacco, and the registration of vehicles.

Stamp duty is payable on grants of probate in respect of movable property and transfers of immovable property.

Income Tax

Income tax is determined in accordance with a person's or entity's residence (rather than domicile).

Individuals who are solely or principally resident in Jersey are taxed on their worldwide income at a rate of 20%. Social security contributions are payable at variable rates and there is also a long-term care contribution payment made by every taxpayer based on the tax payer's total income up to a maximum rate of 1.5%.

There is a marginal rate of income tax at 26% applicable for individuals earning just above the annual exempt amount of GBP14,900 (GBP15,900 for those born before 1952). The lower of the amount assessable to tax under the 26% marginal tax calculation, and that payable under the normal 20% tax calculation rules, is payable. 

Wealthy individuals moving to Jersey who have been approved under the Control of Housing and Work (Jersey) Law 2012 by Jersey's Population Office, may be permitted to pay income tax at the rate of 20% on the first GBP725,000 of annual worldwide income and 1% on all income over and above that amount, with the minimum annual tax yield being GBP145,000. Individuals not resident in the island are charged to tax only on income arising to them from sources within the island, except (by concession) Jersey bank interest. Where trustees are resident in Jersey (as will frequently be the case for Jersey law trusts), the trustees are, strictly speaking, chargeable to tax in respect of all the income arising to them in that capacity.

Taxation of Trusts

However, by concession, the taxation of the trustees is adjusted to reflect the tax position of the beneficiaries of the trust and, where the beneficiaries include legal bodies, the ultimate individual beneficial owners of those legal bodies. Therefore, the tax treatment of the income arising to the trustees will reflect the tax treatment which would have applied to the beneficiaries (or the ultimate individual beneficial owners of any legal bodies which are beneficiaries) if the income had arisen to them directly.

Where either all of the life tenants of a trust or all of the beneficiaries of a discretionary trust are:

  • non-Jersey resident individuals;
  • legal bodies ultimately wholly owned by non-resident individuals; and/or
  • Jersey charities exempt from income tax under Article 115 of the Income Tax (Jersey) Law 1961,

by concession, the trustees will not be taxed on any non-Jersey source income and the statutory exemptions in Article 118B of the Income Tax (Jersey) Law 1961 will be treated as being available to the trustees.

In this context, "life tenants" means beneficiaries of a trust having a right to trust income as it arises.

The statutory exemptions in Article 118B include an exemption from Jersey income tax for:

  • Jersey bank interest;
  • any distribution received from a Jersey resident company which is made out of profit/gains taxed at the rate of 0% in the company; and
  • interest paid by a Jersey resident company.

Where a Jersey resident individual is entitled to income from any part of the trust as it arises, is a beneficiary of a discretionary trust, or the ultimate beneficial owner of an interest in a legal body which is a beneficiary, the concessional exemption described above will be restricted. The restriction operates so as to charge tax on the total income of the trust, less any non-Jersey source income or any income falling within the statutory exemptions in Article 118B paid to, or expressly designated or accumulated for the exclusive benefit of, a non-resident individual beneficiary, or a beneficiary which is a legal body wholly owned by non-resident individuals.

Foundations and Partnerships

Foundations incorporated in Jersey are charged income tax at the rate of 0%.

Partnerships, limited partnerships and limited liability partnerships are transparent for income-tax purposes in Jersey.

Jersey does not impose estate or transfer taxes. The court does impose a charge on grants of probate with respect to movable property and has done so for a long period of time. These charges are based on a tariff which is infrequently changed.

With respect to estate planning for Jersey residents or where using Jersey structures for estate-planning purposes for those resident outside Jersey, it is helpful that the Jersey tax regime in this area has not changed significantly for a long period of time. 

At the time of writing, there are no known impending changes to the legal or tax systems in Jersey that are likely to affect tax and estate planning in Jersey in the near future, neither generally nor in a response to the economic uncertainty of COVID-19.

Income tax planning for Jersey-resident persons and entities is fairly limited in practice, because of the low rates of tax charged. Some planning in and around the zero/ten tax regime takes place for wealthy individuals.

As the amount of tax planning for local taxes is fairly limited in practice, Jersey has made only limited changes to address perceived deficiencies and loopholes in its domestic tax system.

On an international level, Jersey is strongly committed to meeting international standards of tax transparency. It has implemented a significant number of tax information-exchange agreements, as well as intergovernmental agreements, such as the US Foreign Account Tax Compliance Act (FATCA), the convention on mutual administrative assistance in tax matters and the Common Reporting Standard (CRS).

Jersey holds the highest possible rating from the OECD, the international body responsible for assessing jurisdictions’ compliance with global standards on tax transparency and information exchange. In addition, on 31 December 2019, the Minister for External Relations lodged with the States Assembly (the island's parliament) draft legislation to introduce the OECD’s mandatory disclosure regime (MDR) in Jersey. 

Jersey has actively participated in meetings with the OECD and Global Forum and is often at the forefront of transparency and information-exchange initiatives, and has been for a significant period of time. Jersey values its reputation as a leading offshore financial centre and is dedicated to maintaining the well-regarded status it holds.

The Taxation (Companies – Economic Substance (Jersey) Law 2019 came into force on 1 January 2019 requiring tax-resident companies undertaking specific activities to demonstrate that they have a substantive presence in Jersey.

On 19 June 2019, Jersey, Guernsey and the Isle of Man published a joint announcement making a collective commitment to bring forward, by the end of 2022, legislative proposals in line with the developing EU standards, in relation to public registers of beneficial ownership of companies.

Jersey's succession laws are based on Norman customary law and a forced heirship regime known as légitime applies (see 2.3 Forced Heirship Laws).

Jersey wealth-structuring vehicles are often used to address undesired or unfavourable succession legislation in foreign jurisdictions. 

As for forced heirship in the context of trusts, the position depends on whether the settlor is Jersey-domiciled or not. Article 9 of the Trusts (Jersey) Law 1984 disapplies all foreign forced heirship rules for all non-Jersey-domiciled settlors (these are sometimes referred to as firewall provisions), so that any question concerning:

  • the validity or interpretation of a Jersey trust;
  • the validity or effect of any transfer or other disposition of property to a Jersey trust;
  • the capacity of a settlor;
  • the administration of the Jersey trust, whether the administration be conducted in Jersey or elsewhere, including questions as to the powers, obligations, liabilities and rights of trustees and their appointment or removal;
  • the existence and extent of powers, conferred or retained, including powers of variation or revocation of the trust and powers of appointment and the validity of any exercise of such powers;
  • the exercise or purported exercise by a foreign court of any statutory or non-statutory power to vary the terms of a Jersey trust; or
  • the nature and extent of any beneficial rights or interests in the property,

is to be determined in accordance with the law of Jersey and no rule of foreign law may affect such a question.

Without prejudice to the generality of the points listed above, any question mentioned in these points is determined without consideration of whether or not:

  • any foreign law prohibits or does not recognise the concept of a trust; or
  • the trust or disposition avoids or defeats rights, claims, or interests conferred by any foreign law upon any person by reason of a personal relationship or by way of heirship rights, or contravenes any rule of foreign law or any foreign judicial or administrative order or action intended to recognise, protect, enforce or give effect to any such rights, claims or interests.

The above, however:

  • does not validate any disposition of property which is neither owned by the settlor nor the subject of a power of disposition vested in the settlor;
  • does not affect the recognition of the law of any other jurisdiction in determining whether the settlor is the owner of any property or the holder of any such power;
  • is subject to any express provision to the contrary in the terms of the trust or disposition;
  • does not, in determining the capacity of a corporation, affect the recognition of the law of its place of incorporation;
  • does not affect the recognition of the law of any other jurisdiction prescribing the formalities for the disposition of property;
  • does not validate any trust or disposition of immovable property situated in a jurisdiction other than Jersey which is invalid under the law of that jurisdiction; and
  • does not validate any testamentary disposition which is invalid under the law of the testator’s domicile at the time of his or her death.

On the rare occasions where the settlor is a Jersey-domiciled person, the customary law of Jersey relating to légitime may be enforced by the surviving spouse or surviving issue of that deceased Jersey-domiciled settlor.

Jersey law confers complete testamentary freedom upon the testator of a will of Jersey immovable property, subject only to a right of dower for a surviving spouse or civil partner which, if claimed, entitles him or her to a life enjoyment (a "usufruct") of one third of the deceased's immovable estate at the date of the deceased's death.

Jersey has a forced heirship regime relating to the movable property of those who die domiciled there. The ability of those persons to dispose of their movable property is restricted, broadly as follows. 

Testate

Where a person dies testate as to movable estate and is survived by:

  • a spouse but no issue, the surviving spouse is entitled to claim:
    1. the household effects; and
    2. two thirds of the rest of the net movable estate (the testator has free power of disposition over the remaining one third); or
  • a spouse and issue:
    1. the surviving spouse is entitled to claim the household effects and one third of the rest of the net movable estate; and
    2. the issue are entitled to claim one third of the rest of the net movable estate (the testator has free power of disposition over the remaining one third); or
  • issue but no spouse, the issue are entitled to claim two thirds of the net movable estate (the testator has free power of disposition over the remaining one third).

Technically, a Jersey-domiciled testator could leave a will dealing with their movable property as they wish. However, they need to be mindful of the fact that a claim could be brought by their surviving spouse and issue to enforce their rights under the regime. Such a claim must be made within a year and a day from the grant of probate at the latest. 

Intestate

Subject to rules on spouses living apart at the date of death, where a spouse (including for these purposes a civil partner) dies intestate and domiciled in Jersey, their Jersey movable estate devolves as follows:

  • where the deceased spouse leaves a surviving spouse but no issue, the surviving spouse takes the whole of the net movable estate; or
  • where the deceased spouse leaves a surviving spouse and issue, the surviving spouse is entitled to:
    1. the household effects;
    2. other movable estate to a value of GBP30,000; and
    3. one half of the rest of the net movable estate; and
  • the issue take the other half of the rest of the net movable estate.

If a person dies leaving neither a surviving spouse nor issue, the movable estate devolves to that person's nearest blood relatives in equal shares per stirpes. If there are no heirs, the net movable estate falls to the Crown.

As regards Jersey immovable property, generally on intestacy such property devolves, subject to exceptions, to the heirs at law in equal shares and as tenants in common.

There is no community of property regime generally in Jersey law.

As in England and Wales, the overall aim of the court in Jersey in ancillary relief proceedings on a divorce is to achieve a fair outcome. The starting point is an equal division of the assets. In reaching a decision, the court will have regard to all of the circumstances of the case, including the factors set out in Section 25 of the English Matrimonial Causes Act 1973.

All jointly owned property and property owned by spouses individually is matrimonial property, notwithstanding that it is open to parties to seek to argue that certain types of property such as pre-marital property, inheritances, etc are non-marital property and in cases where there are marital assets sufficient to meet the needs of the parties and the children of the family, the court may move away from the principle of equality in relation to that non-matrimonial property.

In the absence of an injunction there would be nothing to prevent one spouse transferring marital property in their sole name to a third party without the consent of the other spouse, but the property would likely still be taken into account in the overall division of matrimonial assets.

A key difference in provision in Jersey compared with England and Wales is that the court in Jersey does not have the power to make a pension-sharing order (nor will it give effect to such an order made overseas). The court is, therefore, limited to offsetting pension and non-pension assets.

Prenuptial and Postnuptial Agreements

The Royal Court of Jersey has yet to decide whether it will follow English case law on the subject of prenuptial and postnuptial agreements. English case law is, however, very persuasive and is generally a starting point. Whilst not set out within the Matrimonial Causes (Jersey) Law 1949, the Royal Court, through Jersey case law, follows the factors set out in Section 25 of the English Matrimonial Causes Act 1973 (the Section 25 Factors) when considering ancillary relief proceedings and will consider "all the circumstances of the case". This raises the possibility of both prenuptial and postnuptial agreements being taken into account. However, the weight to be given to such an agreement has yet to be seen and would depend upon a number of factors, including all the circumstances of the case, full and frank disclosure and the Section 25 Factors. The Royal Court has, in one reported case in 2010, declined to give any weight to a prenuptial agreement, stating that it would apply a greater level of scrutiny when considering whether to enforce a postnuptial agreement after negotiations in financial proceedings.

As Jersey does not levy any form of capital gains tax or inheritance tax, a transfer of property, whether during the transferor's lifetime or on death, has no bearing on the cost basis of the property so transferred.

In light of the absence of capital gains tax and inheritance taxes, no tax planning is required to transfer assets to younger generations in Jersey free of tax.

In light of the absence of capital gains tax and inheritance taxes, no tax planning is required to transfer assets to younger generations in Jersey free of tax, thus digital assets do not require tax planning.

For tax and estate planning purposes, Jersey trusts, foundations, companies and limited partnerships are used, either individually or together as part of a larger structure.

Which structure is suitable will depend on various factors and it is important for tax and legal advice to be obtained in any jurisdictions relevant to the structure.

Trusts are recognised in Jersey and have been for a significant period of time (and including prior to the introduction of legislation initially in 1984). Jersey has a long-standing reputation for trust services with a number of local and international professional trust service-providers. The UK ratification of the Hague Convention on the Law Applicable to Trusts and on their Recognition 1985 was also extended to Jersey and so is incorporated into Jersey law, further cementing the recognition of Jersey trusts.

The courts are well-versed in matters of trusts law and the jurisdiction benefits from a number of well-respected trust-advisers.

Professional trust service-providers must be licensed by the Jersey Financial Services Commission and must adhere to regulations and legislation in place. Such regulations include strict compliance and risk requirements as well as staff training, capital maintenance and outsourcing guidance.

Jersey legislative changes over the last few decades with respect to trusts, foundations and other wealth-structuring vehicles have focused on increasing their advantages and increasing Jersey's offering within the offshore financial world. 

For example, the Trusts (Jersey) Law, 1984 and subsequent amendments to it, was praised by many commentators when it was introduced as being modern and at the forefront of trusts legislation internationally. It has influenced the trust legislation of a number of other jurisdictions seeking to adopt a general statute in relation to trusts. Similarly, the Foundations (Jersey) Law, 2009 was seen as a piece of legislation both appealing to common law jurisdictions (to whom the foundation was a fairly new concept) whilst still sympathetic to the civil law roots of the foundation (which date back centuries).

To the extent any benefits of planning with trusts, foundations or similar entities have decreased, this is as a result of changes to legislation in foreign jurisdictions and not in Jersey.

Jersey residents who act as trustee or administrator of a trust, a member of the council or guardian of a foundation, are not normally taxed as a result of their role but will be liable to income tax on any fees paid for the provision of their services. If the trust in question has Jersey-resident beneficiaries or has been established by a Jersey-resident settlor who can benefit from the trust, then, if the trustees are treated as being tax-resident in Jersey, they may be liable to income tax in respect of income generated within the trust. Jersey-resident individuals may also be liable to income tax if they are beneficiaries of foreign trusts or foundations or similar entities.

Should a Jersey resident act as trustee of a trust or member of the council of a foundation in or from within Jersey by way of business they will (unless otherwise exempt) be required to register with the Jersey Financial Services Commission pursuant to the Financial Services (Jersey) Law 1998.

Irrevocable trusts and foundations capable of being altered are permissible in Jersey pursuant to the Trusts (Jersey) Law, 1984 and the Foundations (Jersey) Law, 2009.

Trusts can be varied in one of three ways, pursuant to the terms of the trust if they allow variation, with the agreement of all the beneficiaries (provided they are adults and not under any legal disability) – known as the rule in Saunders v Vautier, or by an order of the court. If a court application is made, it is likely that the court will look to the English law position and particularly the procedural provisions set out in English law, which do not exist under the Trusts (Jersey) Law, 1984. An example of these procedural provisions is consideration of whether an advocate should be appointed to represent the interest of any minors and the unborn.

As regards a foundation, the charter or regulations can only be amended if allowed in the regulations or by an order of the court in certain circumstances (such as that the purpose cannot be fulfilled or to assist the foundation to carry out its objects). The charter and regulations can be amended if provided for therein or by order of the court. The founder may reserve a power to amend or vary in the regulations.

It is also possible in respect of both trusts and foundations for certain powers to be reserved to the settlor or founder, or others appointed by them. However, these powers should not be too extensive as otherwise the integrity of the trust or foundation may be challenged and/or tax consequences may arise.

The Trusts (Jersey) Law, 1984 in particular provides a list of powers the reservation of which will not invalidate a trust. These include, but are not limited to, a power to revoke, vary or amend the terms of the trust; a power to advance, appoint, pay or apply the income or capital of the trust property or to give directions in this regard; the power to appoint and remove trustees and investment managers; and to change the proper law.

There are no tax consequences in Jersey simply because a beneficiary or settlor/founder acts as trustee of a trust or member of the council or guardian of a foundation. Of course, if they are remunerated for acting as trustee, the remuneration received may be subject to income tax. Where the settlor of a trust is Jersey-resident, it may be necessary to apply to the Jersey tax authority to obtain the benefit of the income tax concessions available where the beneficiaries are not resident in Jersey.

The most popular method of asset protection in Jersey is the use of discretionary trusts. 

The reasons for their popularity include their flexibility and versatility as well as the limitation of liability they afford to trustees, in addition to the fact that they can be of unlimited duration. 

In addition, a Jersey trust is protected from challenge and being rendered invalid by reason that it avoids or defeats a claim under foreign matrimonial, civil partnership or forced heirship laws. The Trusts (Jersey) Law, 1984 provides that questions arising in relation to a Jersey trust or any disposition of property to or upon such a trust are to be determined in accordance with the law of Jersey, without reference to the law of any other jurisdiction, thus limiting the ability of a foreign court to attack a Jersey trust.

Companies and trusts are two of the most popular business-succession planning structures and the two are often used together. 

Trusts are particularly popular vehicles to hold shares in family companies. This allows the ownership of the business to remain intact because the trustee will own the shares. This can also assist in avoiding conflicts between family members who may wish to sell their share of the business and those who wish to keep the business within the family. Whilst the trustee may change over time, the shares will remain held on trust and so the structure remains intact for future generations.

Transfers of property, during a lifetime or at death, are not taxable in Jersey and therefore there is no planning undertaken to reduce the value of property by discounting it in respect of a lack of marketability or a lack of control.

Although the Jersey courts have not yet seen many significant cases relating to foundations, given how recently they were introduced, the Jersey courts have seen a number of significant trust disputes over the last few years. 

Some of these cases resulted from the financial crisis of 2008 and 2009. As a result of financial losses suffered by trustees, claims for breach of trust were made against trustees for acting negligently in their investment of the trust funds.

We have also seen cases concerning disputes between power-holders, such as protectors, and beneficiaries or trustees where there have been disagreements as to how the power-holder was exercising their powers and whether they went too far in their actions. Unfortunately, where powers are reserved, there is always some risk that the power-holder will not act within the remits of their role or they will act in a way contrary to that which the beneficiaries, settlor or trustees consider appropriate.

The majority of wealth disputes are heard by the Royal Court of Jersey, which has jurisdiction to hear civil claims of over GBP10,000 (it is the Petty Debts Court in Jersey which has jurisdiction to hear civil claims which are for less than GBP10,000). The Royal Court has full discretion to order a payment to the successful party. Any such order will be based on the alleged loss or loss of profit. The court also has discretion to award costs, either on the standard basis or on an indemnity basis (which is the most generous form of costs order).

Corporate fiduciaries are often used to act as trustees of trusts or as members of the council of foundations, amongst other roles. Where a fiduciary is acting as such in, or from within, Jersey by way of business, they must (if not otherwise exempted) be registered with the Jersey Financial Services Commission. 

A corporate fiduciary wishing to obtain and maintain a licence must meet certain standards set out in the Financial Services (Jersey) Law 1998 and subordinate legislation. They must consider and follow as applicable not only regulatory laws, but codes of practice and guidance issued by the Jersey Financial Services Commission.

In the case of Re Esteem Settlement [2003] JCR 092, the Royal Court of Jersey held that, although the corporate veil of a company could be pierced where a shareholder acted illegally, this was not possible in the case of the trust where the settlor improperly had effective management and control over the trust assets, rather than the trustees.

To date, there has not been any similar case on foundations, which is not surprising given the lack of case law on foundations generally. Arguably, there is no "veil" with regard to a foundation, because a foundation does not have any shareholders. However, a founder can structure the foundation such that he or she can have a high level of control. 

It is possible for trustees to limit, to a certain extent, their liability. In this regard, it is common for trust instruments to include exculpation clauses and trustees will often obtain indemnities before distributing trust funds. However, a trustee cannot be relieved of liability for a breach of trust arising from his or her own fraud, wilful misconduct or gross negligence.

A trustee may also delegate certain functions to professional agents, such as an investment manager. Except where the terms of a trust specifically provide to the contrary, a trustee may delegate the management of trust property to, and appoint, investment managers and appoint professional persons to act in relation to the affairs of the trust or to hold any trust property.

Similar limitations apply to members of the council of a foundation and the limitations on liability are the same for members of the council as they are for trustees.

The extent to which a company director can be indemnified from liability for negligence, default, or breach of duty is limited by law. However, insurance covering such liability can be purchased and, indeed, this is required for fiduciaries that are regulated by the Jersey Financial Services Commission.

It is common for fiduciaries to hold professional negligence insurance.

As a general principle, a Jersey trustee or other fiduciary must act with due skill, care and diligence to fulfil all responsibilities it has undertaken. However, as the rules in relation to the investment of assets held in a trust, foundation, company or other structure are specific to the terms upon which it is established and its purpose, it is difficult to generalise in relation to the types of investments which should be made.

There is no investment theory or standard applied to the investment of assets by fiduciaries in Jersey.

An active business can be held in a trust or foundation, for example by the trustees or the foundation holding shares in a company. In addition, a trust could itself be an active business although this would be somewhat unusual, except in the case of unit trusts, in light of the fact that a trust has no separate legal personality from its trustees. A foundation, however, cannot engage in trading that is not incidental to the attainment of its objects.

If the shares in an active business company are held in a trust or foundation, this does not automatically mean that the trustees or members of the council effectively run the business. The business is run by the directors of the company and usually the trust or foundation documentation will specifically carve out a requirement for the trustees or members of the council to be involved in the underlying business (known as an anti-Bartlett clause) subject, depending on the wording of the relevant clause, to a general duty to monitor.

Although Jersey is not a part of the UK and has its own separate legal system, the local immigration requirements are closely tied to those in the UK.

Individuals of certain nationalities require immigration permission and/or a visa to enter and remain in Jersey, regardless of the purpose of their stay. The Jersey visa requirements are the same as the UK visa requirements. Because Jersey forms part of the Common Travel Area (with the UK, Guernsey, the Isle of Man and Ireland), an individual holding immigration permission and/or a visa to enter the UK is also permitted entry into Jersey.

An individual can find out if they require a visa to enter and/or remain in Jersey by visiting the UK visas website. Persons with a relevant visa can enter as visitors, business visitors, students and for other reasons provided that certain requirements are satisfied in accordance with immigration rules issued by the Island's Lieutenant-Governor (which substantially reflect the UK visa framework).

Owing to the UK's proposed withdrawal from the EU, Jersey residents who are EU and EEA nationals and their families are required to apply for settled (or pre-settled) status in Jersey under the EU Settlement Scheme, in line with an approach adopted in the UK. The deadline for settlement applications to be made is 31 December 2020. Beyond this point, EU and EEA nationals and their family members wishing to move to Jersey will be subject to new or extended immigration requirements.

Those intending to take employment in Jersey may require a work permit in addition to a visa. Generally, nationals of EU and EEA Member States, together with Swiss nationals and certain other British Commonwealth citizens, do not currently require a work permit. There are prescribed work sectors that will be considered for a permit, if one is required.

Separately to immigration permission and work permits, Jersey operates local controls which determine an individual's ability to take housing and employment in the Island (see 7.2 Expeditious Citizenship). For the purposes of work, these controls mean that Jersey employers must have specific permission to engage a non-locally qualified individual within their business. 

For income tax purposes, there is no statutory definition of "resident" or "ordinary resident" but guidance issued by the Jersey tax authority (the Comptroller of Taxes) indicates that the residence status of a person for the purposes of Jersey income tax is dependent on the frequency of visits to Jersey and whether or not the person maintains a place of abode in Jersey.

In respect of domicile, a person who was not born in Jersey can acquire Jersey as their domicile of choice. When they become domiciled in Jersey will depend on the rules in place in their original place of domicile.

As regards citizenship, Jersey falls under the British Nationality Act 1981 as a part of the British Islands together with Great Britain, Northern Ireland, the remaining Channel Islands and the Isle of Man. Islanders are therefore British Citizens.

Migration to Jersey cannot be fully understood without taking into account the Control of Housing and Work (Jersey) Law 2012 (the Housing and Work Law). The Housing and Work Law creates four categories of residential and employment status:

  • entitled – someone who was born in Jersey and/or has lived in Jersey for ten consecutive years (subject to certain rules);
  • licensed – someone who has been approved by the Population Office as an "essential employee";
  • entitled for work – someone who has lived in Jersey for five consecutive years or is married to someone who is "entitled", "licensed" or "entitled for work"; and
  • registered – someone who does not qualify under the other categories.

Entitled status may be granted on social or economic grounds. In particular, a person may be granted entitled status on the grounds of being a high-value resident, depending on the annual tax contribution to be made by the applicant (see 1.1. Tax Regimes). That person will still be required to satisfy immigration requirements for entry. Someone granted entitled status can buy or lease property in Jersey as their main place of residence. The Population Office will normally require such a person to buy or lease a high-value property.

If an individual is granted entitled status on social or economic grounds they have the right to reside permanently in Jersey, provided they continue to satisfy the requirements relating to that status. A person may lose their status if they live away from Jersey for a period of five years (in aggregate) after being granted their status.

As Jersey is not a sovereign state, it does not have its own "nationals". Accordingly, the indigenous Jersey population are British nationals. A person granted entitled status does not automatically obtain British nationality; they must undertake the British nationality test, which is conducted locally with some local questions.

Trusts are a popular vehicle for the provision of benefits to minors and adults under disability. Unlike in other jurisdictions, there are no specific tax advantages in Jersey in the use of certain trusts for the benefit of minors or the disabled and thus any form of trust can be used, depending on the particular circumstances. Often, discretionary trusts and life-interest trusts are used, whereby the trustee can decide when, how much and to whom to distribute assets.

A guardian of a minor (known as a tuteur) or an adult under disability (known as a delegate) is appointed by the court. An application for guardianship should be supported by a family council made up of two or more individuals who know the person to be under guardianship.

There is no specific procedure for ongoing supervision of the court; however, the court does have an inherent right to supervise and, therefore, should the court's involvement be required during the guardianship, an application can be made to the court.

The Income Tax (Jersey) Law 1961 provides for tax relief on pension contributions paid into schemes by employers and their employees. This is to encourage and assist employees in saving for their pensions while they are working. Additionally, Jersey has also introduced a number of pension reforms in recent years which give members of pension schemes greater flexibility as to accessing and consolidating their pension benefits.

A long-term care fund has been established in Jersey to help those who need long-term care. Every income tax payer pays into the long-term care fund by making a long-term care contribution. The maximum long-term care contribution rate is currently 1.5%, but most people will pay less than this.

Since the introduction of the Capacity and Self-Determination (Jersey) Law 2016, which came into effect on 1 October 2018, it is possible to make a lasting power of attorney (LPA) in Jersey which lets the donor appoint one or more attorneys to help the donor make decisions or to make decisions on behalf of the donor. Whilst an LPA can only be made by a Jersey resident, some non-Jersey LPAs may be registered in the Jersey court, giving them legal effect in Jersey.

Under the Wills and Successions (Jersey) Law 1993, an illegitimate child has the same rights of succession as if he or she were the legitimate issue of his or her parents.

Under the Adoption (Jersey) Law 1961, an adopted child is regarded as being the legitimate child of the adopters for all purposes.

Reference to "children" in a Jersey law trust instrument would, in normal circumstances, be interpreted as excluding illegitimate children.

It is possible to exclude illegitimate, legitimated and adopted children from the class of beneficiaries of a trust or foundation as the class of beneficiaries is entirely in the discretion of the settlor or founder.

Surrogate pregnancy arrangements are permitted in Jersey. The woman who gives birth to the baby will be the legal mother and if she is married, her husband automatically becomes the legal father. Couples are therefore advised to apply for a Parental Order to ensure that when the baby is born, the commissioning parents become the legal parents.

Same-sex marriage in Jersey became legal on 1 July 2018 by virtue of the Marriage and Civil Status (Amendment No 4) (Jersey) Law 2018.

Civil partnerships are also permitted and recognised in Jersey under the Civil Partnership (Jersey) Law 2012. That law affords civil partners the same rights (including all civil, fiscal and succession rights) as a married couple. However, those wishing for their overseas civil partnership to be recognised in Jersey will need to satisfy certain conditions set out in Schedule 1 of that law.

Co-habiting couples do not have any particular legal status in Jersey.

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.

Mourant

22 Grenville Street
St Helier
Jersey
JE4 8PX

+44 1534 676 000

+44 1534 676 333

jersey@mourant.com www.mourant.com
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Law and Practice

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Mourant is a leading offshore law firm with expertise in Cayman Islands, British Virgin Islands, Jersey and Guernsey law. The firm's clients include many of the world's leading financial institutions, corporations, public organisations, private equity houses and investment funds, as well as ultra-high net worth individuals and family offices. Mourant Ozannes delivers partner-led advice on complex, multi-jurisdictional and often high-profile matters for clients looking for depth of expertise and a range of resources across Asia, Europe, Latin America, the Middle East and North America. The firm routinely works in partnership with the most prestigious international legal and accountancy firms. Mourant Ozannes' international trusts and private client practice brings together contentious and non-contentious work, enabling it to advise seamlessly on the appropriate jurisdiction in which to establish and administer private wealth structures and to work together without jurisdictional boundaries. The team also advises on trust and foundation law, including trusts holding private wealth as well as those used in the commercial sphere (eg, pensions and employee benefit trusts), and complex trust disputes.

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