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Jersey


Jersey

HISTORY AND POLITICAL STRUCTURE

Jersey is situated off the north-west coast of France in the English Channel. It is the largest and most southerly of the Channel Islands with an approximate area of 45 sq miles. The nearest part of the French coast lies 14 miles to the east in Normandy while 85 miles to the north is Weymouth on the English coast. The island is best known for its sandy beaches in the south and west and high cliffs in the north. Much of the land is used for agriculture. There are plenty of scenic walks with a variety of wildlife. The climate is moderate; Jersey is the sunniest part of the British Isles with an average 1,915.0 hours of sunshine each year for the period 1961 to 1990.

According to the Jersey government, the resident population at the end of 2008 was an estimated 91,800. English and French are both official languages and used widely. In the country areas a Norman-French dialect is spoken. The capital, St Helier lies on the island’s southern cape within one hour’s flying time of London and Paris; there are frequent flights to a number of UK and Continental destinations.

Prior to the Norman Conquest the Channel Islands formed part of the territory belonging to the Duchy of Normandy. In 1204 when Normandy was freed from English rule the islands retained their allegiance to the King of England. Successive English monarchs have ruled the Islands through their claim to the Duchy of Normandy but have observed the Islands’ established laws and customs. Royal charters have confirmed the independence of the Islands’ judicial systems and administration, the right to tariff-free trade with England and freedom from English taxes.

Jersey is not a member of the EU. Protocol No 3 of the UK’s Treaty of Accession to the UK excludes the island from most of the effects of the Treaty, other than those concerning trade in goods.

There is free movement of industrial and certain agricultural goods between the island and the UK according to historic Charter rights; and between the island and EEA countries except for some sensitive products. The island applies the external common customs tariff of the EU.

EU (and hence UK) VAT does not apply to Jersey.

Jersey’s constitutional position in relation to the EU cannot be changed without unanimous agreement of the member states, including of course the UK, which by longestablished convention does not legislate in regard to Jersey without prior consultation.

The Channel Islands consist of two ‘bailiwicks’, Jersey and Guernsey, and there are no constitutional links as such between the two. Jersey is a British Crown dependency. The Queen of England is the head of state and represented by a lieutenant governor. The United Kingdom is responsible for its defence and external relations but by long established constitutional convention it is self-governing in matters of domestic policy. The island has its own legislative assembly, the States of Jersey, and a comprehensive independent legal, fiscal and administrative system. The power to appoint certain local administrators is vested with the Crown; and with certain minor exceptions, legislation passed by the island’s assembly must be validated by the UK Privy Council - normally this is just a formality.

The States of Jersey is a unicameral, directly elected body and there are no party politics. Apart from the few senior offices in the gift of the Crown, most executive powers are administered by committees of the States. This provides for direct, effective administration, but may be short on checks and balances. However, over many years the States has
aimed at creating a well-regulated, efficient financial centre with up-to-date legal, judicial and regulatory frameworks. Broadly, it seems to have succeeded: in 1998 the UK Government carried out a review of the island’s financial regulatory regime with generally positive results (see next section). The Government department which previously regulated the finance sector was reborn in 1998 as the Financial Services Commission, which now operates as an independent regulatory agency. To some extent this change was a response to isolated financial scandals which had threatened the island’s generally good reputation.

The island is not directly represented in the United Kingdom Parliament. By convention Parliament does not legislate for the island without its consent in matters of taxation or on local issues. The Island’s assembly is consulted before any international agreement is reached which would affect it.

ECONOMY

The economy is stable and is based largely on financial services, agriculture and tourism; of these, financial services is dominant, accounting for more than half of gross domestic product. The island has a balance of payments surplus, without external debt, and has low unemployment. The finance sector is dominated by banking, fund management and trust management.

The Jersey government’s 2009 statistical report shows that 47 banks held deposits of GBP170.6bn at the end of September 2009. Funds assets domiciled on the island stood at GBP163bn, having fallen from GBP239.9bn on September 30, 2008.

The Financial Services Commission estimates that 30% of the top 500 European companies and over 10% of the top 700 Asian-Pacific companies use Jersey’s financial facilities. The Government has also encouraged development of light industry, and there is significant activity in the electronics sector.

GDP was an estimated GBP4 billion in 2008, and GDP per head was US$66,000.

Jersey’s economy faced a contraction of 2% in 2010, following negative growth of around 5% for 2009. The government anticipated that the island will run a budgetary deficit of GBP60m in 2010, followed by GBP68m in 2011, and a recurring deficit of GBP40-50m thereafter.

The Jersey currency is the pound which is on a par with the British pound; there are no exchange controls.

Nearly 100,000 companies are registered in Jersey, with many more foreign companies administered from the island. Jersey remains the highest rated offshore international finance centre according to competitive rankings published by the City of London, and was the only offshore jurisdiction in the top twenty in the last report, released in March 2010. Jersey was placed 18th in the Global Financial Centres Index (GFCI) overall.

Geoff Cook, Chief Executive of Jersey Finance Limited, commented:

“Considering the impact of the financial crisis and the scrutiny that has been directed at offshore finance centres, it is extremely encouraging that Jersey has improved its rating and retained its leading position among its offshore rivals. We are now the only jurisdiction in the offshore category in the top twenty so these rankings are very positive for us.” In terms of business and communications infrastructure, Jersey offers Western European standards. The business environment is particularly well-attuned to the finance sector as a result of the island’s long-term policy of promoting itself as an international finance centre, accompanied by a well-developed regulatory structure, and careful supervision of incoming finance-sector businesses in order to screen out doubtful operations.

Jersey’s political stability, low taxes and international credibility make it an attractive place in which to do business. However, in order to protect limited local resources, the administration does not welcome foreign-owned businesses unless they will clearly contribute to the diversity or quality of the services available on the island. Every business that operates in Jersey needs to have a Regulation of Undertaking Licence and the process takes approximately 3 weeks. A business which is planning to trade under a business name needs to be registered with the Jersey Financial Services Commission (JFSC). Restrictions on numbers of employees and the controls on residential accommodation are further ways in which the administration limits business expansion. These rules are not applied to exempt (since abolished) or non-resident companies, which are permitted to hold board meetings on the island and to have some fairly minimal administrative activities there.

By 2001, restrictive housing policies had begun to act as a serious brake on business activity, and in January 2002 the Housing Committee of the States of Jersey published a long-deferred major strategic policy report for 2002-2006, in which it called for sites for more than 1,100 new homes to be zoned in the first five years of the new Island Plan.

At the time, the Island Plan included provision for only 750 new homes, but the Committee said the larger number will allow them to provide 500 rental and 600 first-time buyer homes. Even so, said the Committee, the real shortfall in homes was probably as high as 1,450 - but it considered that development of the additional sites could be phased over a longer period than five years, thus reducing pressure on the construction industry. Alongside this more extended programme, it was considered beneficial to create a ‘residential land bank’.

“Restricting too tightly the supply of land will only have the effect of increasing land values and will ensure that any newly-rezoned sites continue to be the subject of intense speculation,” warn the committee.

Pressure on the availability and price of houses continues to be one of the major constraints on development of the island’s business community, with incoming managers and specialists facing dramatic restrictions on their ability to find reasonably priced accommodation, in the face of a rabidly ‘NIMBY’ (not in my back yard) existing population. Several banks which have relocated to the Isle of Man in recent times said that pressure on staff and property costs in Jersey had influenced their decisions.

WHY CHOOSE JERSEY WHEN STARTING A BUSINESS?

The island of Jersey, one of the Channel Islands between England and France, is a British Crown dependency although in practice it is self-governing. Britain is responsible for its external affairs including negotiations with the European Union; under the UK’s accession treaty with the EU, Jersey forms part of the single market but is outside the EU fiscal area.

Jersey has a buoyant economy dominated by the finance sector. Unemployment is very low. The political stability in Jersey together with its consistently low tax status and its international reputation as an important financial centre make it an attractive prospect to foreign investors and workers. To protect the island’s limited resources the government tends to discourage labour-intensive inward investment that is controlled by non-residents. There are no investment grants or incentives, but electronics and other knowledge-based industries have been encouraged.

Jersey has particularly strong banking, investment fund and trusts sectors, with very well-developed advisory and financial infrastructure.There are a number of low-tax business formats, including International Business Companies, ‘Exempt’ companies, and Limited Partnerships. However in accordance with the Island’s commitment to the European

Council of Finance Ministers (Ecofin), Jersey has pledged to ensure that no new International Business Companies

are capable of being formed. The introduction of the new ‘zero/ten’ tax regime on January 1, 2009 also put paid to the exempt company, although non-financial services companies qualify for the 0% corporate tax. Jersey’s 0/10 corporate tax regime may prove to be short-lived, however, due to concerns expressed by the EU that it does not adhere to the ‘spirit’ of the Code of Conduct on Business Taxation. A fiscal strategy review is being undertaken by the government with a view to reporting back in time for the 2011 budget in late 2010.

Jersey’s unique situation with regard to the EU is both a strength and a weakness. The island will remain a favoured base for holding and trading companies working into the EU, and for e-commerce activity; but it has the European Commission and the OECD to contend with.

Jersey signed a ‘commitment’ letter to the OECD in February 2002, but it contained an ‘Isle of Man’ level playing field clause making changes dependent on comparable changes in Switzerland and the USA. By mid-2003, however, the OECD seemed to have forgiven Jersey, and was assisting it to design a ‘0/10’ corporate tax system.

In May, 2002, it became clear that Jersey, along with its fellow UK dependent territories Guernsey and the Isle of Man, was ready to sign up to the EU’s information-sharing regime. After the EU finally reached its compromise agreement on the Savings Tax Directive in early 2003, Jersey decided, along with Guernsey and the Isle of Man, to apply a withholding tax to the returns on personal savings for EU residents. The Directive came into force on July 1, 2005.

Jersey seems to have emerged from a second wave of attacks by the OECD against offshore secrecy in the wake of the 2008 financial crisis in a strong position, and its commitment to fiscal transparency through new Tax and Information Exchange Agreements and its record as a reputable financial centre should stand it in good stead.

Advantages of the Jurisdiction of Jersey

There are many advantages in forming a Jersey company, which include the following:

  • Company formation in Jersey is in a reputable jurisdiction. The island is a highly regarded jurisdiction due to stringent compliance laws. The UK positively ranks as the 20th least corrupt country in the world, according to the 2010 Corruption Perceptions Index by Transparency International, a global measure of corruption amongst public officials and politicians.
  • Jersey company formation is a corporate structure that enjoys no corporation tax. Exceptions to this include i) companies in the financial services where a 10% tax rate is applied, ii) local utility companies who pay 20% and iii) rental income profits from property development that will continue to incur 20% a tax rate.
  • Jersey companies incorporated for overseas corporate groups or private clients will be taxed at 0%. Companies who are part of a group and taxed at 0% have the advantage of being able to pass on losses in order to offset the profits of another company in the group. Although the companies are themselves taxed at a 0% rate, this group relief will also affect the Jersey resident shareholders personal tax assessments on distributions from such a company.
  • There are no minimum capital requirements with Jersey company formation.
  • For Jersey company formation, a minimum of one director is required and need not be a resident in Jersey. However, corporate directors are not permitted.
  • Investors planning Jersey company formation can benefit from the close proximity to mainland Europe.
  • Healy Consultants will assist our Clients to open international corporate bank accounts to support Jersey company formation.

Investors are attracted to the jurisdiction because of its political stability, low taxes and international credibility and good transport communications. However, the administration has adopted a protectionist approach. Foreign business and investors are only encouraged if they contribute positively to the jurisdiction’s services and business.

Placing an order for the formation of a company

The establishment and operation of companies in Jersey is regulated under the Companies (Jersey) Law 1991 and
Companies (Amendment No.6) (Jersey) Law 2000.  This law consolidated a number of earlier laws with regard to com-
panies and their operation in Jersey.  In general, the principles contained in the Jersey legislation are based on English
company law.

The formation of a Jersey International Business Company can take place by using an order form which can be provided by the Registry Agent.

Off-the-shelf companies are not available due to the requirement to disclose beneficial ownership and trading activi-
ties.

The Registry Agent will check the name availability of the company (whether there is no company under such name already). In Jersey the law requires that all financial service providers know the identity of their client so the actual contact details must be indicated at the Registry Agent.   This information remains confidential.

Requirements for the Registration of an IBC

  • Director: The minimum number of directors is one; they must be natural persons. If a company has a sole director, the sole director cannot be the company secretary. The director may be of any nationality and need not be resident in Jersey.
  • Secretary: A company secretary is required who can be a natural person or body corporate. Can be of any nationality and need not be resident in Jersey.
  • Shareholder: The minimum number of shareholders is normally two. However, if the company is to be a wholly owned subsidiary then only one shareholder is required.
  • Shares & Capital: Shares issued by a company may be denominated in any currency and different classes of shares may be denominated in different currencies. The normal authorised share capital is GBP 10,000 (or the foreign currency equivalent), although the minimum authorised capital may be a nominal GBP 2, normally with two       shares of GBP 1, or the foreign currency equivalent. All shares issued must be paid in full in cash.
  • Name of the Company: Names of Companies with limited liability must have the suffix Limited or Ltd., or the French equivalent Societe avec Responsabilite Limitee or SARL.
  • Company must have a registered office and a registered agent in Jersey.

Required Documents to register the company:

  • Notarized copy of your Passport.
  • Notarized Copy of utility bill for address verification less than 3 months old
  • Application documents.

When all the details are confirmed and the payment for the relevant fees received, the Registry Agent will prepare the Memorandum and the Article of Association of the new International Business Company. These will be filed with the Registry of International Business Companies in Jersey. There is no need to sign any statutory info, the initial company formation documents are prepared and signed on your behalf by the Registered Agent always under the procedures set by the Companies (Jersey) Law 1991. The Registered agent will file the corporate documents of the company, will pay the applicable registration fees and arrange for the documents to be submitted to the Jersey  Registrar of companies for registration. All the relevant documents will be kept in the Registered Agents office.

Corporate documents of an IBC

  • Original certification of incorporation of IBC
  • Memorandum and article of Association
  • First minutes and Corporate Resolutions containing the appointment of directors, allocation of shares, share certificates, copies of the Registry of Directors and the Registry of shareholders if they need them.
  • Share transfer forms, trust declarations, appointments of representative (power of attorney) and the Corporate Seal.

The Business Environment in Jersey is very encouraging and easy to understand.

In accordance with Jersey’s commitment to the ‘Rollback’ provisions of the EU Code of Conduct for Business Taxation, the International Business Company vehicle was abolished to new entrants with effect from 1st January, 2006. Benefits for existing beneficiaries of the International Business Company regime will be progressively extinguished by no later than December 31, 2011.

The status of International Business Company can be held by an incorporated Jersey company or the branch of a foreign company. An IBC is resident in Jersey for tax purposes but the rates of tax are very low on non-Jersey income. Jersey residents may not hold shares in an IBC. Prior to the legislative changes, an annual advance tax payment of GBP1,200 must have accompanied an application for IBC status. As for private companies in general, beneficial ownership has to be disclosed, but is not kept on the public record.

 

GENERAL OVERVIEW

Location

Channel Islands.

Time zone

GMT + 1 hour in summer.

Population

90,000

Capital

St Helier.

Airport(s)

One.

Language

English, French.

Currency

Pound sterling.

Political system

Parliamentary democracy.

International dialling code

+44 (0) 1534.

Legal system

Customary law with a strong influence of common law.

Centre’s expertise

Private wealth management and capital market transactions, trusts, international insurance, mutual fund administration and management, international banking.

TAX

Personal income tax

20%.

Corporate income tax

Financial services business: 10% (excluding Fund Managers).

Exchange restrictions

None.

Tax treaties

UK, France, Guernsey

SHARE CAPITAL

Permitted currencies

Any currency.

Minimum authorised capital

No

Minimum share issue

No (subject to minimum number of shareholders as referred to below).

TYPE OF ENTITY

Shelf companies

Available.

Timescale for new entities

Two days for a standard incorporation. Fast-track incorporation available (two hours).

Incorporation fees

Standard: £200, Fast-track: £400.

Annual fees

£150.00

DIRECTORS

Minimum number

Private company: one. Public company: two.

Residency requirements

No.

Corporate directors

Allowed.

Meetings/frequency

No specific requirement.

SHAREHOLDERS

Disclosure

Yes.

Bearer shares

Not permited.

Minimum number

Private company: one. Public company: two.

Public share registry

No, but disclosure of membership once a year in annual return.

Meetings / frequency

Annual general meeting (can be waived).

ACCOUNTS

Annual return

Yes.

Audit requirements

Public company: mandatory. Private company: optional.

OTHER

Registered office

Yes: must be situated in Jersey.

Domicile issues

None.

Company naming restrictions

Yes.

Commitment

Our commitment is doing great work and we never settle for less for our clients