Financial services in Jersey

Royal Bank of Scotland building.

Jersey-based financial organisations provide services to customers worldwide. In June 2020, it was reported that there were 13,450 jobs within this sector.[4] The Royal Bank of Canada (RBC) is a major employer with some 900 staff employed in Jersey, as of March 2009.[5]

The finance sector profits were about £1.18 billion in 2015.[6]

On 4 February 2009 Jersey Finance officially announced its intention to open a new representative office in London.[7]

In the second quarter of 2020, the total value of banking deposits held in Jersey decreased from £145.7bn to £141.2bn. There were 33,186 live companies on Jersey's register.[8]

The first regulated Bitcoin fund was established in Jersey in July 2014, with the approval of the Jersey Financial Services Commission, after island leaders expressed a desire for Jersey to become a global center for digital currencies. At the time of the establishment of the fund by a Jersey-based hedge fund company, Bitcoin was already being accepted by some local businesses.[9]

Jersey shares The International Stock Exchange (TISE) with Guernsey, where it is based.[10]

Logo of the financial regulator Jersey Financial Services Commission

Jersey is one of the top worldwide offshore financial centers.[11] It is described by some as a tax haven.[12] It attracts deposits from customers outside of the island, seeking the advantages such places offer, like reduced tax burdens.

Jersey has a long history of low-tax and duty-free economic activity. Jersey's situation between France and England meant that Jerseyman took up smuggling of goods into French and English ports. For example, Jean Martel of St Brelade, organised brandy and textile smuggling into both sides of the Channel.[13]

Jersey has been variously given the title of a 'tax haven' since the 1920s, when wealthy Brits began to move (or move their wealth) into the island to avoid wealth and inheritance taxes. Even in the modern day, Jersey continues to encourage high-wealth individuals to settle in the island to take advantage of lower tax rates.[13]

Its taxation laws have been widely criticised by various people and groups. Tax Research UK claims Jersey is a tax haven.[14] In 2020, the Tax Justice Network, a UK tax advocacy group, placed Jersey 7th in its list of "The top 10 countries that have done the most to proliferate corporate tax avoidance and break down the global corporate tax system"[15] and 16th in its Financial Secrecy Index.[16] It too claims Jersey is a tax haven, citing its "half-hearted committment to transparency".[17] Jersey's finance industry featured in a BBC Panorama documentary, titled "Tax me if you can",[18] first broadcast on 2 February 2009.[19]

As of 2020, the European Union does not consider Jersey to be a tax haven ("non-cooperative jurisdictions for tax purposes"). Jersey cooperates with the EU and implements all its commitments.[20] When the list was established in 2017, Jersey was initially on its "grey list" (Annex II), however was removed from the list entirely in March 2019.[21] One of the mitigation measures Jersey put in place was the "Economic Substance Law" in 2019.[22] Under the law, companies within its scope must be directed and managed, conduct Core Income Generating Activities ("the key essential and valuable activities that generate the income of the company and these activities must be carried out in Jersey") and have adequate employees, expenditure and physical assets in Jersey.[23]

The Netherlands however does consider Jersey to be a tax haven. Jersey was placed on their tax avoidance "blacklist" in 2019. The list includes any jurisdiction with a corporate tax rate below 9%. As a result, companies registered in Jersey must pay 20.5% tax on interest and royalties received from the Netherlands from 2021.[24]

However the former Chief Minister of Jersey, Terry Le Sueur, has countered these criticisms, saying that "Jersey [is] among cooperative finance centres".[25] Jersey has tax information exchange agreements with 40 countries, double taxation agreements with a number of other countries (with more "ready for signing").[26]

In September 2013 the UK Prime Minister, David Cameron, said it was not fair any longer to refer to any of the overseas territories or Crown dependencies as tax havens, as they have taken action to make sure that they have fair and open tax systems.[27] Its information privacy law also provides exemptions that other European countries do not, for example in the way Trusts do not have to disclose as much information to Benficiaries about use of their personal data as is normally required under such laws.[28]