Mon, 06/07/2009 - 15:14
Jersey is a world-renowned centre for fund domicile, servicing and management and is home to a wealth of professionals including law firms, accountants, auditors, administrators, custodians and banks, all with considerable experience in the establishment, day-to-day administration and management of hedge funds, private equity funds and property funds as well as fund management businesses.
The island's reputation was bolstered in May with its inclusion on the OECD's white list of jurisdictions active in implementing internationally agreed tax standards. The Jersey Financial Services Commission is a long-established and internationally-recognised supervisory body that oversees a mature and appropriate regulatory and legislative framework for both investment managers and fund vehicles.
This backdrop, together with additional advantages ranging from a comprehensive range of fund vehicles to a well-calibrated tax structure and intangible factors such as excellent quality of life and communications, are set to put Jersey in the front line of international jurisdictions as market conditions improve for alternative funds.
Over the past year institutions such as investment banks have shed large numbers of able investment professionals, many of whom may consider establishing their own fund operations once the recovery brings investors back to the table. Jersey, which has already attracted a number of hedge fund management businesses, is poised to capitalise on dissatisfaction with the UK as an environment for alternative managers.
Located just off France's Normandy coast, Jersey enjoys quick and plentiful air connections with London as well as other European cities including Dublin, Geneva, Paris and Zurich. With a population of some 85,000, the island offers enviable health and education systems, sporting and cultural activities, an enviable selection of top-class restaurants and 25 beaches.
Jersey offers a range of regulatory regimes for the establishment of funds of all types. The light-touch Expert Funds regime launched in 2003 has been a popular choice for the establishment of hedge funds; they are restricted to professional, experienced and high net worth investors and are supervised by the Commission.
By contrast, the Unregulated Eligible Investor Fund scheme introduced last year involves no initial or continuing regulatory oversight. It provides an efficient and cost-effective framework for the establishment of hedge funds with minimal or no requirements on the content of offering documents (except to warn that the fund is not regulated in Jersey) and the identity or location of service providers. Eligibility generally means investment of a minimum of USD1m.
The island's tax structure is also appealing to international management businesses and their principals. Personal income tax is levied at 20 per cent on Jersey source income and there is a 3 per cent Goods and Services Tax, but there are no capital gains or inheritance taxes.
High net worth individuals pay income tax on non-Jersey source income on a sliding scale starting at 20 per cent on income up to GBP1m, falling to 1 per cent on income over GBP1.5m, and enjoy exemptions from housing consent for buying and renting certain classes of property on the island.
A fund management company established in Jersey is subject to income tax at 10 per cent, compared with 30 per cent corporation tax in the UK, and concessions may be negotiated with the Comptroller of Income Tax on a case-by-case basis. Hedge and other fund vehicles are subject to a zero rate of income tax.
Nigel Strachan is head of business development for corporate clients in Jersey with Kleinwort Benson (Channel Islands)
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