Jersey, Channel Islands

Intergovernmental agreements (IGAs)

On 13 December 2013, the Jersey authorities signed an IGA with the United States to facilitate tax reporting under the Foreign Account Tax Compliance Act (FATCA) regime. The Jersey authorities also signed a similar IGA with the United Kingdom on 22 October 2013. The IGA with the United Kingdom is sometimes known as UK FATCA. This is because the information exchanged under the UK IGA is similar to that exchanged with the United States under FATCA.

Tax information exchange agreements (TIEAs)

The Jersey tax authorities are committed to being tax transparent, with an increased emphasis on agreeing to further DTAs and TIEAs. Jersey has signed TIEAs with 38 countries and is negotiating DTAs with several other jurisdictions (see Foreign income in the Income determination section for a description of DTAs that have been signed).

Automatic Exchange of Information – the Foreign Account Tax Compliance Act (FATCA), the Common Reporting Standard (CRS), and the Crypto Asset Reporting Framework

Jersey adopted FATCA on 18 June 2014, with first reporting taking place in 2015. A similar agreement to exchange information with the United Kingdom (sometimes called 'UK FATCA' also commenced at this date but was superseded by the implementation of the CRS in respect of reporting years 2016 and thereafter.

Jersey adopted the global CRS on Automatic Exchange of Information on 1 January 2016. The first reporting took place in 2017.

On 1 January 2026, Jersey adopted the revised Common Reporting Standard (CRSv2.0), with first reporting due to take place in 2027 for accounts maintained during reporting year 2026.

On 1 January 2026, Jersey also adopted the OECD Crypto Asset Reporting Framework. First reporting is due to take place in 2027 in respect of reporting year 2026.

Mandatory Disclosure Regime (MDR)

On 9 September 2020, the government of Jersey passed legislation introducing MDR aligned to The OECD Model Mandatory Disclosure Rules for CRS Avoidance Arrangements and Opaque Offshore Structures.

At the time of writing, despite the law having been made, it has yet to be brought into force. Although a date is yet to be confirmed, it is expected to be implemented in due course and Revenue Jersey have expressed a commitment to giving industry six months notice.

Once in force, the law will require promoters, service providers, and, in some circumstance, users of CRS avoidance arrangements and opaque offshore structures to provide the Comptroller of Revenue with information about those arrangements and structures within a 30-day window of, broadly, the arrangement being made available.

It is intended that information relating to users resident in other jurisdictions will be exchanged with the tax authority of that jurisdiction in accordance with the terms of the Multilateral Competent Authority Agreement on the automatic exchange regarding CRS avoidance arrangements and opaque offshore structures, also ratified by the States of Jersey on 9 September 2020. 

Economic substance

Companies

Jersey introduced economic substance legislation for accounting periods beginning on or after 1 January 2019. Jersey tax resident companies carrying on relevant activities are required to meet an economic substance test.

Relevant activities are defined as any of the following businesses:

• Banking
• Insurance
• Fund management
• Finance and leasing
• Headquarters
• Shipping
• Holding company
• Intellectual property holding
• Distribution and service centre

Self-managed funds are required to demonstrate they have substance in Jersey for any financial period that commences on or after 1 January 2021. Self-managed funds are always treated as having received income from the relevant activity of fund management, so the gross income test does not apply.

There are financial penalties in the case of failure to meet the economic substance test. In the first financial period up to GBP 10,000, in the second period up to GBP 100,000. After the first penalty, the Comptroller may provide the Minister for Treasury and Resources with a report on the company, and the Minister may apply to the court for an order of winding up. There is provision for appeal against penalty determinations.

The requirements for companies with regards to the economic substance test dictate that they must be directed and managed in Jersey, undertake their core income generating activities (CIGA) in Jersey, and have adequate employees, expenditure, and physical assets in Jersey.

Partnerships

On 29 June 2021, a law extending Jersey's economic substance regime to partnerships was passed. The economic substance requirements apply to a Jersey 'resident partnership' undertaking a 'relevant activity' unless it is exempt.

The exemptions are detailed as follows:

• 'Domestic exemption': These are partnerships with activities only within Jersey that are also not part of a multinational group
• 'Individual exemption': These are partnerships with only Jersey tax resident partners already subject to tax in Jersey
• 'Collective investment funds'
• 'Place of effective management (POEM) outside of Jersey': Those partnerships with a POEM in a qualifying jurisdiction (i.e. with a tax rate higher than 10% for a company or individual) or if the partnership is required to comply with a similar economic substance test in that jurisdiction.

Partnerships in existence before 1 July 2021 are in scope of the law for accounting periods commencing on or after 1 January 2022. Partnerships formed on or after 1 July 2021 are in scope from the date of formation.

The law is broadly aligned with the company economic substance regime, summarised above, although there are points of divergence particularly relating to exemptions and sanctions for failing the economic substance test.