Carey Olsen Starting Point Guides are intended as a general introduction and guide to different aspects of Jersey employment law.
They are a summary of the most important issues that we come across. It is very much the edited highlights of those issues. If you would like legal advice in relation to any specific circumstances, please do give us a call.
This Starting Point Guide addresses the fundamentals of starting a business in Jersey.
Jersey - not just cows
Jersey is the largest of the Channel Islands and is a British Crown dependency.
It has its own financial legal and judicial systems. It is not part of the UK or of the European Union (although it has close relationships with both). It also has its own breed of instantly recognisable cows.
Starting a business in Jersey
Starting a business in Jersey (or relocating one here from another jurisdiction) is relatively straightforward, particularly compared to some other jurisdictions. However, there are some key issues of which you should be aware.
How should I structure my Jersey business?
We have extensive expertise in assisting clients in determining and implementing the most appropriate structure for their business.
OFFSHORE LAW SPECIALISTS
The most common form of ownership structures are as follows:
- sole traders;
- limited companies; and
- limited partnerships (an increasingly common option for fund managers).
We have significant expertise in advising all of the above structures, particularly where there are regulatory or other considerations to take into account.
The majority of businesses in Jersey elect to trade through a company structure which has limited liability.
The key legislation governing companies in Jersey is the Companies (Jersey) Law 1991 (the "CJL").
The CJL provides that a company may be formed:
- as a public or private company (save that a company may not be registered as private if it has more than 30 subscribers, unless the Jersey Financial Services Commission is satisfied that by reason of the nature of the company's intended activities its affairs may properly be regarded as the domestic concern of its members); and
- having the liability of all or any of its members:
- limited by shares (i.e. limited to the amounts unpaid on their shares);
- limited by guarantee (i.e. limited to the amounts which they undertake to pay on a winding-up); or
- unlimited; and
- which is a par value, no par value or a guarantee company.
Types of companies permitted under the CJL include cell companies, being either protected cell companies (which can create protected cells, not having their own separate legal identity) or incorporated cell companies (which can create incorporated cells with their own separate legal identity).
Of the possible combinations, the most common type of company formed in Jersey is a private par value company limited by shares. This is in part due to the similarity between such form of company and an English private limited company. From a legal perspective a no-par value company offers greater flexibility in terms of capital etc.
The main incorporation steps for a Jersey Company are as follows:
- A statement of particulars, signed on
behalf of the original subscribers. These particulars include:
- the name and intended registered office address of the company and,
- in the case of a public company, details of its proposed directors and financial year end date
- A memorandum and articles of association, in a form suitable for the type of company.
- A cheque or other payment of the prescribed fees, which vary by
the required response time as follows:
- £165 for an incorporation within 5 business days of documents being received by the Registry
- £242 - within 3 business days
- £305 - within 2 business days
- £425 - within 1 business day
- £670 - within 2 hours.
There is also an out of hours service available by agreement with the Registry which attracts a minimum fee of £1,210.
"Anti-money laundering" and "know your client" documents and information must be provided to the Companies Registry or regulated corporate services provider in order to establish a Jersey company, including information relevant to Jersey's beneficial ownership and control register (which is not currently a public register).
In addition, it will be necessary to make an application to the Jersey Financial Services Commission under the Control of Borrowing (Jersey) Order 1958 (known as "COBO") for consent to issue shares in the Company. This is generally a simple process, although the Jersey Financial Services Commission's "sensitive activities" policy requires additional work to be undertaken when the proposed business of the company (including its subsidiaries) involves a "sensitive activity".
It may also be necessary to apply for authorisation from the Jersey Financial Services Commission should the business be intending to undertake regulated financial services.
More information on employing employees in Jersey is set out below.
Finally, certain unregulated activities are subject to anti-money laundering/"know your client" regulations, and require a registration with the Jersey Financial Services Commission.
Businesses generally need to register with:
- the Income Tax Department;
- the Social Security Department; and
- the Taxes Office (for GST).
Goods Services Tax (GST)
GST at the standard rate of 5% is payable on the majority of goods and services supplied in Jersey for local use, including imports.
Registration is required for businesses with a turnover of over £300,000.
Most Jersey residents (other than high net worth individuals) are subject to income tax at 20%. There are no capital gains, gift or inheritance taxes. Sole traders and partners in partnerships are taxed at 20% on the profits of their businesses.
Employers must make appropriate deductions in respect of income tax from wages and salaries and account to Revenue Jersey for them under the Income Tax Instalment Scheme (ITIS).
Stamp duty is only payable on the acquisition and financing of Jersey property and a capped probate duty is payable on the registration of Jersey wills. There is no stamp duty generally in respect of the transfer of shares in a Jersey company (except local real estate transactions where property is owned through shares, in which case Land Transaction Tax at the same rate as stamp duty is ordinarily payable).
Social Security is payable both by employers and employees as follows:
FROM JULY 2022:
Employee social security contributions
Employer social security contributions
Standard earnings limit (SEL)
Any income up to £4,764 per calendar month (or £57,168 per year) will attract social security contributions at the rate of 6%*
Any income up to £4,764 per calendar month (or £57,168 per year) will attract social security contributions at the rate of 6.5%.
Upper earnings limit (UEL)
Any income above £4,764 per calendar month will not attract employee social security contributions.
Any income above the SEL but below the UEL (i.e. between £4,764 and £21,724 per calendar month, or £57,168 to £260,688 per year) will attract social security contributions at the rate of 2.5%.
* A temporary reduction in employee social security contributions from 6% to 4% has been announced and will apply from 1 October 2022 to 31 December 2022.
In general terms, a Jersey incorporated company is subject to Jersey income tax at a flat 0% rate in respect of its income, unless it is within a restricted sector of local financial services companies or utility companies or it has local property-related income.
A financial services company, which is regulated in Jersey in respect of certain types of financial services, is subject to Jersey income tax at a 10% rate.
A utility company, which provides local utility services, is subject to Jersey income tax at a 20% rate.
Property-related income is subject to the 20% standard income tax rate.
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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.