There has been a long held presumption by some that most of Jersey's banking business comes from the UK and is in effect round tripping designed simply to dodge tax.

This has always been a most unlikely scenario given the dominance of international currency deposits held in the Jersey banking system. Recent evidence from the newly launched  Capital Economics report debunks this myth completely, demonstrating that detractor allegations were always motivated by exaggeration and raw speculation.

The following slide shows that the majority of Jersey deposits originate from beyond the EU.

The amount coming from the UK is clearly quite small and most of it from institutions or non-doms, with very little attributed to individuals due to pay UK tax on their deposits. In any event, the UK will get information on all classes of investor under the new FATCA agreement.

Much of this value originates from the GCC and Asia. Again estimates of tax due on these funds is often overstated, as the Middle East by and large does not have income or capital gains taxes, and many jurisdictions, like Hong Kong with territorial tax systems, will often not tax overseas deposits.

Lots of countries offer no or low tax to non-residents.  For example, the UK does this in the Eurobond market, worth trillions of pounds, and so does the US on Treasury Bills.

The reason these deposits come to Jersey is down to political and fiscal stability and cross border banking expertise.

Read more from Geoff Cook, CEO of Jersey Finance at CEO blog

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