An International Business Company (IBC) is regarded for Jersey tax purposes as resident in the Island. It may have commercial substance in the Island and employ local residents. For higher tax paying IBCs, it may also be possible to obtain housing consents for foreign employees. However there are additional regulations governing this aspect.
Income derived from international activities is taxed at the following rates:
- £3 million 2.0%
- £1.5 million 1.5%
- £5.5 million 1.0%
- Remainder 0.5%
The Jersey tax authorities will accept that international activities broadly cover activities that, whilst carried on either within or outside the Island, involve transactions with non Jersey residents of the Island. All other income is taxed at 30%. This was amended from 20% with effect from 1 January 1994. Jersey bank interest will generally be regarded as income derived from international activities.
An IBC is neither entitled nor obliged to deduct tax when making interest or royalty payments. Interest and royalty payments are deducted as trading or management expenses in calculating the profits chargeable to tax. Dividends are deemed to have been paid under deduction of Jersey income tax at the standard rate of 20%. No further liability to Jersey tax is incurred by a shareholder.
The conditions for granting IBC status are that any application together with certain information required by the Comptroller of Income Tax and an advance payment of tax of £1,200 must be made within the requisite time limit laid down. No resident of Jersey may have any interest in the company and disclosure of beneficial ownership must be made to the Financial Services Department.
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.
For further information contact Jonathan G. Hooley on Tel (indirect line): + 44 (0) 1481 721000, Tel (direct line): +44 (0) 1481 719544, Fax: +44 (0) 1481 722373.