An option to set up the operation of a foreign company in the Channel Islands is to open a branch office in Jersey. The branch will not be separate from the foreign company incorporated in another jurisdiction, however, it will need to comply with the Jersey rules for registration and taxation.
| Quick Facts | |
|---|---|
| Applicable legislation (home country/foreign country) |
Foreign |
|
Best Used For |
A foreign company that decides to open a branch office in Jersey can use it as a permanent establishment to expand its activities |
|
Minimum share capital (YES/NO) |
no |
| Time frame for the incorporation (approx.) | 1 week |
| Documents to be filed by parent company | The foreign entity’s certificate of registration and articles of association are required, as well as other documents to open a branch office in Jersey |
| Management (Local/Foreign) |
Local |
| Legal representative required (YES/NO) |
Yes, a branch representative is appointed through a special resolution |
| Local bank account (YES/NO) | yes |
| Independence from the parent company | The branch is not an independent, separate legal structure |
| Liability of the parent company | The parent company is fully liable for the debts and liabilities when it chooses to open a branch office in Jersey |
| Corporate tax rate | 0% in general 10% for financial services companies 20% for utility companies |
| Annual accounts filing requirements | Annual submission as per the Income Tax Law 1961 |
| Possibility of hiring local staff (YES/NO) | Yes, subject to conditions for registration to pay social security contributions and submitting employee returns |
| Travel requirements for incorporating branch/subsidiary (YES/NO) | The registration of a foreign company in Jersey can be done through a power of attorney |
| Double tax treaty access (YES/NO) | yes |
The branch is one of the two ways in which a foreign entity can establish its presence in this location in 2023. An important advantage for all legal entities in Jersey is the general lack of corporate taxation for most of the applicable business activities.
Our agents specializing in company formation in Jersey can give you all the needed details about the available options and guide you through the process.
Our team provides complete assistance for the incorporation of companies in the Bailiwick of Jersey, as well as the Bailiwick of Guernsey. Both are popular destinations for offshore company creation. Companies incorporated in either of these locations can be used for many types of transactions. Our team can give you complete details about branch and company formation in Guernsey.
We assist investors who wish to open any type of company. While branches are used by foreign companies willing to expand their business activities, a Jersey company can be set up for many different business purposes including investment and trading, asset holding, or for trust purposes. Reach out to our team as soon as you decide to open a company in Jersey.
We assist investors who want to set up a company in Jersey irrespective of its form. You do not need to be interested in opening the branch of a foreign company to work with us, we can also give you details about Jersey company (their types, incorporation, and requirements), and will also provide a comparison, upon request, of the different business forms available to investors.
If you want to open a branch on another country, such as UAE, we can put you in touch with our local partners. They can help you open a branch in Dubai in nearly two months after you submit the required documents.
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Branches in Jersey
For the purpose of taxation, and the general treatment of the establishment in the country, when investors open a branch office in Jersey this branch is not perceived as a local company, but as the permanent establishment of a foreign company.
Unlike the subsidiary, which is managed and controlled as a locally registered company, the branch will not be treated as a resident and, as a result, it will only be subject to tax on the income it produces in Jersey.
The foreign company has complete control over its Jersey branch, however, it is also liable for its debts and obligations as there is no distinction between the two legal entities.
We invite you to watch a video about the branch:
Tax matters concerning branches in Jersey
Foreign companies that open a branch office in Jersey in 2023 are required to comply with the local laws regarding taxation.
We summarize the main requirements for foreign companies that establish their local presence in Jersey below:
- comply with the entirety of the Income Tax Law of 1961;
- observe the requirements for submitting tax returns;
- register with the authorities for the purpose of submitting tax returns as needed;
- request a foreign tax residence certificate, if required by the foreign country in which the parent company is based.
The local requirements, combined with the fact that the parent company is liable for the debts and obligations of the Jersey branch (given the fact that the branch is not a separate entity) are important issues to take into account before setting up a permanent establishment in Jersey.
We remind foreign entrepreneurs that when they open a branch office in Jersey, it will only be subject to taxation on the income it derives from the respective branch’s operations.
The following taxes apply in Jersey:
- 0% standard corporate income tax rate; this represents an important advantage for most investors;
- 10% corporate income tax for regulated financial services companies; our team can give you details about these mandatory requirements;
- 20% corporate income tax rate for utility and property income companies; details can be provided upon request by our company formation agents;
- 5% goods and services tax; registrations are mandatory for companies with supplies exceeding £300,000 in a 12-month period.
Jersey has signed full and partial double taxation agreements with various countries. Our lawyers in Jersey can give you more details.
Foreign companies in Jersey
There is more than one way in which a foreign company can establish its operations in Jersey.
Broadly speaking, a foreign company is one that is incorporated in another jurisdiction, other than Jersey, and falls under one of the two categories:
- a company that is managed and controlled in Jersey, that has a local board of directors and board meetings that are held in Jersey; this is a company that is treated as a tax resident and it is subject to tax on all its income; you can read more about the subsidiary below;
- the permanent establishment in Jersey, the branch, which is not considered a tax resident and is subject to income only on the profits derived from Jersey.
Foreign companies preferring to set up a subsidiary in Jersey, which is a locally registered company, can reach out to our agents for more information about the advantages compared to the branch and also the registration requirements.
For subsidiaries, the authorities in the country of origin of the parent company may request a foreign tax residency certificate. This is issued upon request by Revenue Jersey.
Entrepreneurs running a subsidiary in Jersey who need to apply for the tax residency certificate can submit the request form with the help of our team. These certificates can also be requested in bulk (more than one at a time, through a special request form).
Foreign companies in Jersey that do not work through a permanent establishment (branch) are required to register with the authorities in order to receive a tax identification number (which has a 10-digit format) as well as a tax reference.
With the tax reference, the foreign company will register with the online services of the Taxes Office and then submit a tax return.
For more information on taxation, submitting returns, opening a bank account, and general compliance issues, please reach out to our agents specializing in company formation in Jersey.
Business licenses in Jersey
Tax registration is only part of the requirements when doing business in Jersey. Companies are also required to apply for a business license in order to run the business, branches and subsidiaries included.
When investors open a branch office in Jersey, it is understood that it will engage in the same business activities as the parent company abroad. This is why one of the industries that commonly use branches is the financial industry.
When an application is submitted for a business license, it will mean that the said business is automatically registered for social security contributions.
Industry-specific licenses apply for the following: agriculture, animals, pets, livestock, architecture, childcare, construction, cosmetic services, fishing and aquaculture, food and drink, gambling, healthcare, accommodation services, entertainment and public events, road works, retail, transport and waste management.
Businesses in the finance industry are regulated by the Jersey Financial Services Commission (JFSC) and are subject to special licensing conditions.
The following activities require specific licenses, and their licensing is overseen by the JFSC: banking, insurance, investment businesses, money service businesses, trust company businesses, non-profit organizations, medication businesses, and others.
According to the Jersey Financial Services Commission, the number of registered companies in Jersey has been increasing in recent years. The following figures highlight this growth:
- the number of registered companies in 2021 was 34,523;
- at the end of Q4 2022, this number was higher, at 35,028 (this includes the number of live companies on the register);
- at the end of 2020, the value of funds under investment management was at GBP29.5 billion, an increase compared to 2019; at the end of 2022, this value was even higher, surpassing the GBP 30 billion;
- the total number of funds in 2022 was 637, and these had 1,914 separate pools.
Investors who open a branch office in Jersey in 2023 in one of these industries can reach out to our team for information about the specific requirements issued by the JFSC.
Other requirements for branches in Jersey that hire employees
Social security contributions can be seen as a separate issue from the general taxes the permanent establishment in Jersey is subject to.
These are paid by all businesses, separately from those paid by the employed individual. The business is the one to pay the class 2 contributions, and the condition for the payment is set forth as soon as the permanent establishment receives its business license.
Employers in Jersey pay the income tax instalment scheme (ITIS) – as deductions from the wages of the employees, and the social security contributions which are only payable for those employees who meet the minimum earnings threshold.
If the branch does not require a special license to operate in Jersey, it will register for social security payments separately.
Contact us for complete assistance during branch registration, as well as for any other matters related to company incorporation.
Our team also assists investors who wish to open a Jersey trust. These types of vehicles can be ideal for real estate purposes, as well as for employee share option schemes. At an individual level, they can be suitable private wealth management vehicles. Our team will give you complete details about the formation of a trust and its advantages. You can reach out to us as soon as you decide to incorporate.