With more than 40 years of experience in the industry Jersey is a politically stable and tax neutral international finance centre. Jersey features prominently when it comes to real estate investment structuring for UK and European property. Jersey's proximity to Europe, not only in relation to its time zone but also in relation to its legal and conveyance system, combined with flexible investment structuring and tax planning opportunities makes it the primary choice for private and institutional real estate investors. The range of structures is extensive, varying from a holding company for individual or club deals to very private or public fund structures created for sophisticated and experienced investors.
Why use Jersey?
1. Tax advantages
The most attractive feature of a Jersey real estate investment solution is the tax savings on real estate investments into the UK. Structuring through Jersey can assist with the mitigation of stamp duty and stamp duty land tax, income tax, capital gains tax, inheritance tax and value added tax (VAT). These taxes will apply to UK-based but also foreign investors, and it is these overseas investors that are likely to be unaware of the effect of these taxes. The tax situation for foreign investors in Jersey is very different: Non-resident investors into a Jersey investment structure are not subject to local taxes, including bank interest. Regardless of the type of vehicle used it will be exempt from taxation in Jersey and there is no withholding tax on payment of any dividends or interest made by the vehicle. In addition Jersey has no capital gains tax, corporation tax, stamp duty, inheritance tax or VAT. There is also generally no minimum capital requirement for corporate vehicles, including collective investment vehicles, and government incorporation costs are among the lowest in the world. Regulatory fees for collective investment vehicles are usually within £2,000 per annum, way below the fees imposed in other jurisdictions. There is also no Taxe d'Abonnement (a tax charge based on the value of assets).
2. Flexible legal framework
A common law jurisdiction, both real estate and corporate transactions do not need to be notarised. Instead incorporations are effected by mere registration through the Companies Registrar and resolution of the board and the shareholders. Companies can be established within 24 hours at a cost comparable or below other leading international finance centres. The choice of investment structures ranges from public and private companies with par value or no par value shares, companies limited by guarantee to protected cell and incorporated cell companies. Jersey also offers four different types of Limited Partnership with or without its own legal personality providing tax transparency for foreign investors.
3. World class governance framework and regulations
Jersey is recognised as one of the leading international finance centres, the most recent being:
- Best International Finance Centre, International Fund & Product Awards 2011; and
- Jersey is of course on the OECD 'White List'.
The most popular investment structure for real estate investment remains the Jersey Property Unit Trust and the Jersey Very Private Fund which are both only subject to the simple Control of Borrowing Order (COBO) regime that applies to all incorporations on the Islands and for which consent will usually be granted within 5 business days. This scheme will allow up to 15 professional investors, usually with a minimum investment of £250,000 or currency equivalent.
Apart from the Unregulated Fund regime all other fund classes provide for a fast track authorisation of a local investment management company. All sophisticated or experienced investor fund regimes available on the Island have no investment restrictions imposed. Unregulated, Very Private Funds and closed ended Expert Funds have no custodian requirement proving Jersey's determination to remain one of the world's leading and most flexible real estate and alternative investment funds jurisdiction.
4. About Jersey
Jersey, at 45 square miles in size, is the largest of the British Channel Islands. The Island is located 85 miles south of mainland Britain and 14 miles from the coast of France. The jurisdiction's main language is English, however many other European languages are spoken and can be used for business transactions.
The time zone is the same as the UK. The business day begins before Tokyo closes and continues well into New York trading time. A close proximity to Europe but independence from the European Union, Jersey offers both location and time zone benefits with short flight connections to the UK and Europe.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.