Jersey: Investment Fund Management In Jersey

Last Updated: 24 April 2009
Article by Niamh Lalor

Most Read Contributor in Jersey, September 2016


The UK investment manager exemption currently enables certain non-UK residents (including offshore investment funds such as hedge funds and private equity funds) to appoint UK-based investment managers without rendering the fund UK resident or liable to UK tax.

However, the eligibility conditions for the UK investment manager exemption are expected to be reviewed by HMRC which may impact adversely on investment management activities currently carried out from London. In addition, certain changes to the tax treatment of carried interest payable to investment managers on the performance of private equity funds are likely to result in the withdrawal or restriction of taper relief, which may make the UK a less attractive location for managers of private equity funds.

Investment management operators in the UK are liable to UK tax both at entity level on investment management fees and at the level of the investment management personnel in the form of income tax and, possibly, capital gains tax.

Recent changes to Jersey's tax regime mean that investment management vehicles can now be structured to pay Jersey tax at a rate of 0% and this change, combined with developments in Jersey's regulatory policy, makes the Island an ideal location for investment managers considering establishing offshore operations or even relocating from the UK.

If correctly designed, the investment management structure and, if also based offshore, the individuals performing the investment management function, are likely to achieve a significantly reduced tax burden than if located onshore. As a result of recent changes in Jersey's tax regime, a Jersey based entity that is regulated for the conduct of fund services business as an investment manager will be able to reduce its tax liability to 0%. In addition, given many investment funds have to date been established offshore, establishing investment management operations offshore may improve the tax analysis in relation to the tax residence of the fund itself.

The Island's well established and stable political environment combined with high regulatory standards in the finance industry provide investment managers with the advantages of a well-regulated offshore jurisdiction whilst remaining less than a one hour flight from London and close to Europe's other financial centres. Furthermore, the Island's attractive environment, modern infrastructure and high standard of living ensure that it has advantages beyond the financial.

For many years, businesses have established operations in Jersey to take advantage of a beneficial tax regime, but the ability to establish a real presence in the Island has historically been limited to local residents or multinational financial institutions. However, in response to a desire to diversify Jersey's economy and encourage high value, low impact business, such as investment fund management, to the Island, the local authorities have made it easier for certain businesses to establish a presence and for individuals to become resident in the Island.

Corporate Taxes

With the introduction of the "zero-ten" tax regime in Jersey, the profits of a Jersey based business involved in the provision of investment management services to investment funds may be taxed at a rate of 0% provided the investment manager is regulated for the conduct of fund services business as an investment manager, and not as either an administrator or a custodian.

Employee Incentives

A key advantage of operating offshore is that offshore based investment fund managers can seek to retain and motivate key local and onshore employees using offshore employee benefit trusts or international pension structures. These common methods of providing employee benefits to staff are often easier to implement in an offshore environment as the complex employment tax legislation of jurisdictions such as the UK do not always apply.

Personal Taxes

Jersey has long been admired for its simple tax regime. There are neither wealth taxes nor capital gains tax or inheritance tax and Jersey residents are subject to personal income tax at a rate of only 20% on worldwide income. However, certain individuals involved in the management of investment funds who become resident in Jersey may (subject to a number of conditions) seek to have a significant proportion of their non-Jersey income taxed at a rate as low as 1%.

Becoming Resident in Jersey

Many investment managers establish operations in Jersey without physically relocating staff to the Island. Where an investment manager is structured without a physical presence in Jersey, many of the regulatory requirements applicable to such a manager may be met by a regulated administrator such as Ogier Fund Administration (Jersey) Limited.

However, we also see a trend for some or all of the principals involved in providing investment management to consider a move offshore.

Jersey residents enjoy a high standard of living and good accommodation in the Island is frequently in demand. The availability of housing stock to new residents is limited to those individuals whose residence in the Island is a result of their being 'essentially employed' or where their residency 'can be justified on social or economic grounds'. It is by satisfying this latter category that high net worth individuals such as investment fund managers may be permitted to become resident in Jersey.

For an investment fund manager to be granted a permanent licence to reside in Jersey, the authorities will consider the individual's business and social background, the number of their dependants and any other noneconomic benefits that Jersey may obtain if residency is granted.

The individual's likely tax contribution is a key factor. To meet current requirements for residency, an individual whose residence in the Island can be justified on social or economic grounds would normally be expected to make an annual tax contribution of £100,000. This represents a reduction on previous requirements.

Individual employees whose residence in the Island is as a result of them being "essentially employed" do not have to agree a minimum income tax contribution. The factors taken into account in assessing whether to grant "essentially employed" status include the expected economic contribution of the employer and the qualifications of the employee. In a significant policy shift, authorities in Jersey have demonstrated an increased willingness to grant "essentially employed" status to new businesses that meet the criteria for establishing a presence in the Island, particularly if it can be demonstrated that the position cannot readily be filled from within Jersey's existing labour force. These individuals are subject to tax on their worldwide income at a rate of 20%.

Ogier has close links with the States of Jersey's Population Office (which administers the residency system) and can also assist in the acquisition of local premises and associated matters.

Jersey Expert Fund Regime

Many investment fund arrangers have taken advantage of Jersey's Expert Fund regime since its inception in 2004. Expert Funds, which are subject to a light degree of regulation, have proved to be popular and suitable vehicles for many types of investment funds, including hedge funds and private equity funds. Expert funds are nil rated for tax in Jersey.

To conduct investment business in relation to an expert fund, and to avail itself of the 0% tax, a Jersey resident investment fund manager will need to be registered under the Financial Services (Jersey) Law 1998 for the conduct of fund services business as an investment manager. The investment fund manager will need to satisfy the Commission as to span of control issues and may be subject to annual inspections.

The regulation of an investment fund manager in Jersey is not particularly onerous and the compliance requirements will be far less demanding in terms of management time and expense than the equivalent regulatory requirements of the United Kingdom, Europe or the United States. The Commission has expressed its desire to be flexible in relation to the regulation of fund managers establishing a business in the Island specifically to encourage the investment fund industry to use Jersey.

Jersey Eligible Investor Fund Regime

Jersey has recently developed an eligible investor fund regime for eligible investors. Qualifying funds are not subject to regulatory control or supervision in relation to set up or ongoing operations. Offer documents issued by eligible investor funds are exempt from the usual requirement to obtain regulatory authorisation for circulation. There are no structural or content requirements imposed in relation to offers made by eligible investor funds. In consequence, no investment restrictions or borrowing limitations are imposed by regulation and such funds can be fully flexible and established on a fast-track basis. Eligible Investor funds are nil rated for tax in Jersey.

To conduct investment business in relation to an eligible investor fund and to avail itself of the 0% tax rate, again, a Jersey resident investment fund manager would need to be regulated for the conduct of fund services business as an investment manager.


Jersey is an attractive jurisdiction in which to domicile investment funds and their investment managers. Given the recent UK developments this proposition may now be even more attractive for the investment fund industry.

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.