Tax information: going to Jersey
Welcome to the tax guide on going to Jersey, produced by Deloitte. Looking for tax information about leaving Jersey, Click here
This document has been prepared based on the legislation and practices of the country concerned as at 01 April 2009. Tax legislation and administrative practices may change, and this document is a summary of potential issues to consider. This document should not be used as a substitute for professional tax and immigration advice which should be sought for the country of arrival and departure in advance of moving in order to discuss your specific circumstances.
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Before/once you arriveQ. Do I need a work permit to work in Jersey?
A. Yes, you will need to acquire a work permit to allow you to work legally in Jersey if you are a non EU national. The application for the work permit will be made by your employer to the Immigration Department in Jersey. Please note that the process and criteria differs in Jersey to that of the UK.
Detailed information can be reviewed by logging on to the local Government website-
http://www.gov.je/HomeAffairs/CusAndImm/Immigration/
Q. Do I need a licence to work in Jersey?
Employers are governed by a licence agreement with the local Government referred to as The Regulation of Undertakings & Development Law. It is the employer's responsibility to manage their licence.
Q. Is it beneficial to use an offshore bank account (situated outside Jersey) in comparison to using account in Jersey?
A. If you are Not Ordinarily Resident you will only be taxable in Jersey on Jersey source income (including Jersey bank interest) and any non-Jersey income which you remit into Jersey. A non-Jersey bank account may therefore be advisable for the purposes of limiting remittances into Jersey.
Q. What is the name of the Jersey tax authority?
A. The Jersey tax authority is the Jersey Income Tax Office. The website is http://www.gov.je/TreasuryResources/IncomeTax/default.htm
Q. What is the tax year?
A. 1 January to 31 December.
Q. How will I be taxed in Jersey?
A. Income tax is based on residence. Individuals who are resident but not ordinarily resident in Jersey are subject to tax on their Jersey-source income and on remittances of non-Jersey source income to Jersey. Ordinarily Resident individuals are subject to Jersey income tax on their worldwide income. Non Resident individuals are subject to Jersey tax on local-source income only (except, by concession, local bank interest).
Q. How is tax residence determined?
A. There is no statutory definition of residence in Jersey. You will be considered resident if:
1. You are physically present in Jersey for more than 183 days in the tax year; or
2. Present, on average, for at least 3 months per year over a 4-year period; or
3. You maintain a place of abode in Jersey and visit Jersey for any length of time, however short such a visit may be.
Ordinary residence, which like residence is not statutorily defined, implies a greater degree of continuity of living in Jersey. You may be considered ordinarily resident in Jersey in any tax year if you meet either of the following conditions:
(1) You normally spend all of your time in Jersey other than periods spent away on holiday or business.
(2) You maintain a place of abode only in Jersey and visit for more than 90 days a year on average.
In practise , if you intend to live in Jersey for 3 years or more you are likely to be considered ordinarily resident.
By concession, an individual whose centre of life is abroad, in the sense that they have business or professional activities abroad which keep them continuously outside Jersey except when on holiday, will be regarded as Not Ordinarily Resident unless the average period spent in Jersey amounts to or exceeds 3 months.
Q. Are there any regional or state taxes?
A. No
Q. Can I file a joint tax return with my spouse?
A. Married couples are taxed jointly on all types of income, and the husband is responsible for filing the joint return and paying the tax.
There is a provision for separate assessments. An election for this must be made in writing no later than 31 October in the year of assessment to which the election relates.
The aggregate of the tax payable under separate assessments cannot be lower than the tax liability had a joint return been made.
Q. What rate of tax will I pay in Jersey?
A. The standard rate of income tax is 20 per cent. A different rate may be applied to people with small incomes if this would be advantageous. Non-residents are subject to tax at a rate of 20 per cent on any Jersey source income (e.g. annual profits from any property in Jersey) but not bank interest by concession.
Q. Can I claim a tax deduction for charitable contributions?
A. Charitable contributions made under a 5 year deed of covenant and “one-off” donations to approved local charities of between £100 and £500,000 qualify for tax relief. Qualifying donations are made net after deduction of 20% income tax, which the charity recovers from the Comptroller of Income tax.
Q. Are any other tax deductions available?
A. The primary personal deductions are Jersey mortgage interest expenses, pension contributions and life insurance premiums. Disbursements or expenses incurred wholly and exclusively for the purposes of a trade are allowable. Certain types of personal allowances are also available depending upon marital status, children etc. These allowances/exemptions will be pro-rated based on dates of residence in any tax year. Many of these allowances are being reduced and will not be available from 2011. Employment expenses are deductible only if incurred wholly and exclusively for the purpose of the employment.
Q. I will also be paying tax in my home country. Am I being taxed twice?
A. Foreign tax paid is ordinarily allowed as a deduction from taxable income. Jersey has double tax treaties with the UK and Guernsey which may allow for credit relief.
Q. Do I need to file a Jersey tax return?
A. If you are subject to income tax you must file an annual income tax return with the Comptroller of Income Tax.
Q. When does it need to be filed?
A. The tax return should be filed by the last Friday in May or, if your tax affairs are handled by an agent, the last Friday in July.
If the signed return is not submitted by this date, a late filing penalty will be applied.
Q. Can the filing deadline be extended?
A. No
Q. What is the procedure for paying tax?
A. Jersey operates the Income Tax Instalment System (ITIS), whereby a percentage of an employed individual’s salary is deducted each month by their employer and is offset against their tax liability for the year. The percentage is known as the Effective Rate and varies from person to person, depending on their personal circumstances. Any shortfall between the ITIS contributions made and the tax liability due, will be adjusted for by amending the Effective Rate, although a payment of the outstanding tax can be requested. Strictly where more than 30 per cent of the tax liability remains unpaid, after the Friday following the first Monday in December, in the year following the year of assessment, the individual will suffer a 10% surcharge. However, in practise this is unlikely to be applied if the individual is paying their tax via ITIS.
Non-employed individuals are required to make a payment on account by the end of April in the year following the year of assessment. The payment is calculated as 40 or 50 per cent of the agreed prior year tax liability. The balance of the liability is payable once the assessment is issued with the deadline for payment being early December (as above).
Individuals registered with the Comptroller prior to 1 January 2006 will pay their tax on a prior-year basis. Those registering after this date will be required to pay on a current-year basis.
Q. Will non-cash compensation be taxable (e.g. housing)?
A. Non-cash compensation received by virtue of employment is taxable in Jersey. Some benefits are exempted by statute. The value of the benefit is generally determined by the cost to the employer but there are separate rules in respect of cars and accommodation.
Q. I will be working in different countries while living in Jersey. Will all of my employment income be taxable in Jersey?
A. This will depend upon your residence status. Individuals who are Ordinarily Resident are subject to Jersey tax on worldwide income. Individuals who are Not Ordinarily Resident are subject to tax on Jersey-source income and on remittances of income to Jersey. Non-residents are subject to tax on Jersey-source income, excluding bank interest by concession.
Q. Will I pay Jersey tax on investments and rental income generated in my home country?
A. This will depend upon your residence status. Individuals who are Ordinarily Resident are subject to Jersey tax on worldwide income. Individuals who are Not Ordinarily Resident are subject to tax on Jersey-source income and on remittances of income to Jersey.
Q. Is there a Capital Gains Tax regime in Jersey?
A. No.
Q. What do I need to know about any other tax regime, e.g. Inheritance, Estate or Wealth tax?
A. There are no wealth or estate taxes in Jersey.
Q. Will I be required to pay Jersey Social Security?
A. Jersey has a compulsory social security scheme for both employed and self-employed individuals. For employees there are Class 1 contributions based on salary and payable by both employee and employer and these are subject to a maximum contribution. For self-employed individuals there are Class 2 contributions.
Any liability to Class 1 contributions will depend on how long you plan to stay in Jersey, where your employer is based and your nationality. Generally, if you are working for an employer from a country with which Jersey has a reciprocal agreement you should be able to remain in your home social security system for a specified period.
Q. Are social security contributions deductible for tax purposes?
A. Social Security contributions are not deductible in computing the taxable income of individuals, but 52% of the contributions (i.e. the employer contributions) paid by the self-employed are deductible.
