LOCATION: Jersey is located just off the French coast beside Guernsey and Alderney.

ADVANTAGES OF A JERSEY COMPANY:

TAXATION

The indigenous corporate tax rate for Jersey residents conducting business in or from the Island with a company is 20%. Where real or beneficial ownership does not so rest, the above tax rate will not apply, even if management and control is carried out on behalf of a non-resident. The taxation liabilities of non-indigenous companies are as follows:

EXEMPT COMPANIES: To qualify as a tax exempt company it is necessary to show that no beneficial ownership rests with a Jersey resident and that the objective of the business is not to penetrate the local market. Unlike Isle of Man Exempt Companies there is no legal necessity to employ local directors or a secretary, however, given that most clients wish to demonstrate indigenous management and control, such companies do generally have Jersey nominees. In lieu of local taxation, the company is liable to pay an annual exempt duty of Sterling £600.00. The application for this status must be made on, or before, the 31st of March of the year in which the exemption status is sought. For newly incorporated undertakings, which by definition may not even have existed in March, an application must be received within 3 months of the date of incorporation. In addition to the exempt duty there is also an annual filing fee of £150.00 to be paid each January to the Registrar of Companies. Late payment, i.e. after February, will result in heavy fines. Exempt Companies are ideal for passive activities such as holding property but are not generally suitable for trading activities (see Isle of Man Exempt companies above).

INTERNATIONAL COMPANIES: International Companies are deemed resident in Jersey for tax purposes. However, the tax actually paid will be negotiable provided all activities are outside of Jersey. The criteria for ownership is virtually identical to that for an Exempt Company in that there must be a declaration stating that beneficial ownership does not rest with a Jersey resident. The advantage of such a company over a standard Exempt undertaking is that it may benefit from Jersey's double taxation treaty with the United Kingdom and, perhaps, circumvent various high tax jurisdictions anti-avoidance provisions. Many such provisions only apply if a foreign company only pays a set duty in lieu of variable taxes. For income which is generated from activities which occur on the Island the full 20% Jersey tax rate will apply, however, where this is not the case there will be a sliding-scale of rates varying from 0.5% where profits are over £10,000,000.00 to 2% where they are less than £3,000,000.00. International Company status must be elected by the 31st of October of the year in which the favourable tax regime is sought. If, because of recent incorporation, this is not possible, then the election must take place within 3 months of the incorporation date. Finally, it should be noted that 'international' status can be applied for by non-Jersey companies which satisfy the standard management and control tests.

HOW TO INCORPORATE A JERSEY COMPANY

As with the Isle of Man, all Jersey companies are considered indigenous until an appropriate election is made. The governing legislation, principally the Companies (Jersey) Law of 1991, and formation procedures are almost identical for all types of undertaking. Nominees can be used for anonymity, although detailed information on the beneficial owners of the company must be supplied to the Financial Services Department. Further, if an intending Exempt or International Company trades before making an election, it could be fully subject to Jersey tax at 20% on its world-wide income.

CORPORATE REQUIREMENTS

Name: The name of the required company should be checked with the Financial Services Department. In the vast majority of cases the ending will be either 'Limited' or Public Limited Company. However, it is possible to use the French equivalent "avec responsabilite limitee".

Capital: There is no specific minimum capital requirement. In most cases, a registration agent will only issue two £1.00 shares. Share capital can be denominated in any currency. The maximum authorised capital available paying the minimum duty is Sterling £2,500.00. If sums are required over this amount, additional duty will be payable.

Registered Office: All Jersey companies require a local registered office for service of process.

Registered Agent/Nominees: Jersey companies do not need a local agent or nominee although such a structure may be advisable for tax planning purposes.

Board of Directors: Private Jersey companies only require one director. Directors must be real individuals and not corporate entities. There are no nationality/residence restrictions.

Shareholders: Jersey law requires a minimum of two initial subscribers, however, as stated above there need only be one director.

Books, records and seal: Full register of members and charges must be kept at the registered office in Jersey. Unlike the Isle of Man, an official company seal must be adopted.

Powers of attorney: All Jersey companies may grant a general or specific power of attorney to any person, to act on its behalf, to execute contracts, agreements, deeds and other instruments. These powers are not a matter of public record.

Bearer shares: Bearer shares are not available in Jersey.

Annual Meetings: All Jersey companies must hold an annual general meeting with no more than an 18 month gap between such meetings. Meetings can be held inside or outside of Jersey.

Trusts: Without doubt, Jersey is the most sophisticated and monitored offshore trust jurisdiction in the British Isles. Trustees tend to be of a high calibre. Trust law is based on that of England, although with far more favourable provisions. Anti-avoidance legislation in the UK can, however, affect their use.

ANNUAL FEES & GOVERNMENT TAXES

All Jersey companies must submit an annual return to the Registrar whether or not the company has traded. This demands full details on all capital, membership and officerial developments, if any, over the preceding year. The current filing fee is £150.00. If a company, which has not made an election, has conducted no business (business however including the activation of a bank account) no duty or general tax liability will exist. For International Companies, it should be remembered that once the election has been made the deposit against future taxes of £1,200.00, is not refundable even if the company lay dormant. For Exempt Companies, the £600.00 is, as already indicated, payable in advance. No rebates are given. All Jersey companies must maintain proper accountancy records. However, Exempt Companies do not have to file accounts. For indigenous and International Companies filed accounts do not need to be audited, unless the company is a PLC, provided appropriate amendments have been made to the articles of association.

Penalties for non-payment: As with most similar jurisdictions there are penalties for those who have not submitted their annual returns/duties on time. Late penalties are similar to those of the Isle of Man and Guernsey. Struck-off companies are difficult and expensive to reinstate.