Jersey, Channel Islands

Resident companies are generally taxed on their worldwide income. A permanent establishment (PE), e.g. a branch of a company, is taxed on profits attributable to the PE. Non-resident companies are taxable on Jersey real estate income.

Companies are liable to income tax at a rate of 0%, 10%, or 20% on taxable income. The general rate applicable is 0%; the 10% and 20% rates apply to certain companies/income streams as explained in this section. The tax rate applies to the company as a whole, the only exception being Jersey-source real property income, which is taxed at 20% regardless of the classification of the real property holding company.

Certain Collective Investment Funds and Securitisation Vehicles can elect to be exempt from tax on income, other than income from Jersey land or property, for an annual fee of 500 British pounds sterling (GBP).

10% rate

The 10% rate applies to Jersey financial services companies. A company is defined as a financial services company, under Article 123D of the Income Tax (Jersey) Law 1961, if:

• it is registered under the Financial Services (Jersey) Law 1998 to carry out investment business; trust company business; fund services business as an administrator, custodian, or registrar in relation to an unclassified or unregistered fund; or general insurance mediation business as described in either class P or class Q in Part 3 of the Schedule to the Financial Services (Financial Service Business) (Jersey) Order 2009
• it is registered under the Banking Business (Jersey) Law 1991
• it holds a permit under the Collective Investment Funds (Jersey) Law 1988 as an administrator, registrar, or custodian
• it holds either a Category A or Category B permit under the Insurance Business (Jersey) Law 1996, or
• it is a company trading in the provision of credit facilities to customers by way of making any advance or granting of any credit, including (but not limited to):
  • the provision, in connection with the supply of goods by hire purchase, leasing, conditional sale, or credit sale, of credit in instalments for which a separate charge is made and disclosed to the customer, and
  • any assignment to the company of an advance or credit repayable by the customer to a person other than the company.

20% rate

The 20% tax rate applies to Jersey-based utility companies, such as telephone, gas, and electricity companies. Additionally, income from Jersey real estate, including rental income, property development profits, and income from exploiting Jersey land (e.g. quarrying activities) is subject to tax at 20%. Companies involved in oil importation and supply are also taxed at 20%.

As of 1 January 2022, a company in the cannabis industry (i.e. one that cultivates cannabis plants, processes cannabis plants for any purpose, or distributes, sells, or further processes cannabis plants that have been cultivated or processed) is also subjected to the 20% tax rate.

Large corporate retailers are also in scope of the standard 20% tax rate. A 'large corporate retailer' is a company that meets the following tests:

• 60% of its trading turnover is from retail sales to customers in Jersey, and
• retail sales to customers in Jersey are equal to or greater than GBP 2 million per annum.

'Retail sales' does not include wholesale supplies or the provision of services.

Where the taxable profits of a 'large corporate retailer' are less than GBP 500,000 per annum, the company is subject to tax at 0% on all of its profits.

Where the taxable profits of a 'large corporate retailer' are GBP 750,000 or more per annum, the company is subject to tax at 20% on all of its profits.

Where the taxable profits of a 'large corporate retailer' are more than GBP 500,000 but less than GBP 750,000 per annum, a tapering provision will apply. The effect of the tapering provision for 'large corporate retailers' with taxable profits of between GBP 500,000 and GBP 750,000 per annum is to reduce the effective rate of tax on a sliding scale from 0% up to 20%.

0% rate

The 0% rate applies to all entities that are not exempt, financial services entities, large corporate retailers, cannabis businesses or utility companies, including fund managers who do not hold any of the permits mentioned above.

Pillar Two – Multinational Corporate Income Tax (MCIT)

The Organisation for Economic Co-operation and Development (OECD) has designed a framework to introduce a global minimum tax of 15% for very large multinational enterprise (MNE) groups, known as Pillar Two, that have annual consolidated revenue of 750 million euros (EUR) in at least two of the four fiscal years immediately preceding the tested fiscal year. Consequently, most Jersey businesses remain unaffected by Pillar Two and remain subject to the existing parallel corporate income tax (CIT) regime (better known as 0/10).

The Pillar Two Model Rules provide two complementary measures known as the Income Inclusion Rule (IIR) and Undertaxed Profits Rule (UTPR). The IIR and UTPR permit other jurisdictions to apply a top-up tax where the minimum rate is not achieved domestically; consequently, these measures encourage low tax jurisdictions to implement a Domestic Minimum Tax (DMT) to protect their tax base and avoid the IIR or UTPR from being applied. There is a third rule, the Subject to Tax Rule (STTR), that is intended to ensure that double taxation agreements (DTAs) entered into by developing countries do not prevent certain cross-border transactions from being taxed at a rate of less than 9%.

Jersey’s response to Pillar Two is the introduction of a DMT known as the Multinational Corporate Income Tax (MCIT), which is aligned with the OECD’s Model Rules, together with the IIR.

The MCIT is effective for fiscal years, being the accounting periods of the ultimate parent entity (UPE) of the MNE group, starting on or after 1 January 2025. In-scope Jersey constituent entities of the MNE group will pay MCIT at 15%.

Whilst Jersey has implemented the IIR, it has not implemented the UTPR or STTR at this time. Jersey only has one DTA with a developing country at this time that could be affected by the STTR, and the island has committed to implement this rule if asked by that developing country to do so.

For more detailed information and the most recent updates, please visit PwC’s Pillar Two Country Tracker.

Local income taxes

There are no parish or local government taxes on income.