The economic substance requirement for Jersey 2023 onwards

The economic substance requirement for Jersey 2023 onwards

TAXATION (COMPANIES – ECONOMIC SUBSTANCE) (JERSEY) LAW 2019 is the guidance in relation to companies operating out of Jersey. It sets out the legal requirements for Jersey companies being considered within the scope of the Law in terms of declaring the Company as tax resident in the Crown Dependency.

A company is not a tax resident if it is centrally managed and controlled outside of Jersey. In addition, it must be in a country or territory that a company is charged 10% or higher on any part of its income or it is a tax resident in that particular country or territory. There are three elements where Jersey Companies are considered to be tax resident:

1. The Jersey Company must be managed and directed by board members within the territory of Jersey.This includes, but not limited to , Board of Directors holdings meetings on a regular basis,Board of Directors physically being presented in Jersey, and meeting minutes being held in the registered office of Jersey.
2. The Jersey Company must demonstrate adequate activity in Jesey, including hiring any staff , incurring expenditures and holding assets in jersey.
3. Finally, the Jersey Company must conduct core income generator activities (CIGAs) in Jersey

Banking business:
Raising funds, managing risk including credit, currency, and interest risk
Taking hedging positions
Providing loans, credit, or other financial services to customers
Managing capital and preparing reports and returns
Insurance business:
Predicting and calculating risk
Insuring or re-insuring against risk and providing insurance business services to clients
Management business:
Taking decisions on the holding and selling of investments
Calculating risk and reserves
Taking decisions on currency or interest fluctuations and hedging positions
Preparing reports and returns
Leasing business:
Agreeing to fund terms
Identifying and acquiring assets to be leased (in the case of leasing)
Setting the terms and duration of any financing or leasing
Monitoring and revising any agreements
Managing any risks
Headquarters business:
For Taking relevant management decisions
Incurring expenditures on behalf of group entities
Co-ordinating group activities
Shipping business:
Managing crew (including hiring, paying, and overseeing crew members)
Overhauling and maintaining ships
Overseeing and tracking deliveries
Determining what goods to order and when to deliver them, organizing and overseeing voyages
Holding company business
Intellectual property holding business
The development and subsequent exploitation of the intangible asset generating income:
Taking strategic decisions
Managing and bearing the principal risks
The Acquisition by third parties and subsequent exploitation of and protection of the intangible asset:
Taking strategic decisions
Managing and bearing the principal risks
The generation of revenue from third parties:
Carrying on the underlying trading activities through which the intangible assets are exploited
Research and development
Branding or distribution
Distribution and service center business
The Transporting and storing goods, components, and materials
Stock management
Orders taking
Consulting or other administrative services