Bermuda: Relocating To Jersey As A High Value Resident
THE ADVANTAGES OF JERSEY
For high net worth individuals considering a relocation, there are a number of factors that will be weighed up in making a choice which is right for both the head and the heart. To be a serious contender, a jurisdiction must certainly be fiscally friendly. But it must also be somewhere offering a high quality of life, where one can seriously consider setting up home with one’s family whilst at the same time being able to travel easily for business and leisure purposes.
Jersey offers some of the lowest direct and indirect tax rates in Europe. Individuals are taxed at a maximum rate of 20% on income (with a special regime for approved high value residents, as explained below) and the corporate tax rate is 0% except for financial services businesses (10%) and companies in receipt of income from property and property development. There are no capital or inheritance taxes, and property taxes are low. The standard rate of Goods and Services Tax (akin to VAT) is only 5%.
The island may only measure nine miles by five but it contains a wealth of natural beauty with a stunning coastline and an unparalleled choice of beaches. In addition, there are plenty of shops, bars and restaurants, including three Michelin-starred restaurants and high quality local produce. The island is politically stable with very low crime rates and the standard of education at primary and secondary level is high, with a range of state and private schools. Whilst Jersey is recognisably British, it retains much of its Norman French heritage, notably in relation to place names, and immigration in recent decades from Portugal and Poland have also contributed to a cosmopolitan society.
THE LEGAL FRAMEWORK
The right to work in Jersey and to buy and occupy residential property is controlled by the Control of Housing and Work (Jersey) Law 2012 (the 2012 Law) and entitlement is generally based on length of residence in the island. However, the 2012 Law recognises the benefit to the island of ‘high value residents’ and allows the Chief Minister to grant entitled status where satisfied that this is justified “on social or economic grounds or both, and as being in the best interests of the community”.
This requires applicants to show that they will be able to contribute at least £125,000 per year in personal income tax payments and that they have sustainable annual worldwide income comfortably in excess of £625,000 per year. Under the special regime for high value residents under the Income Tax (Jersey) Law 1964, such residents are taxed at 20% on the first £625,000 of worldwide income and 1% on other worldwide income.
BENEFITS TO THE ISLAND
Applicants for high value resident status must also show that their residency in Jersey will benefit the island in some way. Factors which may be taken into account include:
- voluntary work or business contribution to the local community;
- training or sporting initiatives particularly aimed at youth or educational organisations;
- actual or potential media coverage of any activities that involve their business or social life;
- cultural interests or skills that have benefited a local community which could benefit Jersey;
- general lifestyle and family circumstances, including past charitable work and contributions.
Conversely, any clearly undesirable factors in applicants’ backgrounds, such as criminal records, or adverse media coverage, may work against a successful application.
The Minister will also wish to know of applicants’ plans for further business activities in Jersey, future local employment, training, diversification and any potential resultant increased tax revenues.
Applications for high value resident status are made through Locate Jersey, a governmental agency established to promote inward investment into Jersey and to act as a facilitator and intermediary in relation to applications for both high value resident status and for permission to relocate businesses into Jersey. Locate Jersey offer advice and assistance at all stages of the process, including:
- initial no-obligation discussions about relocating to Jersey;
- one-to-one review meetings with the Director of High Value Residency for advice and assistance tailored to the applicant’s individual circumstances;
- assistance with the preparation of the documentation required for the application dossier;
- undertaking due diligence, and liaising with the Comptroller of Taxes and the Population Office in relation to submitted applications;
- aftercare and advice, including providing access to networking events and other opportunities to develop contacts in the island.
The authorities are committed to processing applications as quickly as possible. Locate Jersey indicate that the decision-making process in relation to submitted applications can take as little as two weeks if all the information required for the application dossier is in order.
Successful applicants will be granted ‘entitled’ status for the purposes of the 2012 Law and may buy or lease property in Jersey as their main place of residence in the island. It will usually be necessary for the property to be valued in excess of £1.75 million or, in the case of apartments, to have been designated as a ‘1(1)K Category’ apartment under the under the Housing (Jersey) Law 1949, the legislation that was superseded by the 2012 Law. The object of this requirement is to ensure that high value residents do not compete for housing with the vast majority of the local population.
As well as the support provided by Locate Jersey, applicants for high value resident status will require the assistance of professional advisers. This will include not only legal and tax advice in connection with the application itself but also all other advice which may be required by clients, their families and businesses in connection with their move to Jersey. These services will include estate planning and structuring, advice and assistance on the setting up and relocation of businesses, and the establishment and administration of trusts, foundations and companies. The past few years have seen a significant increase in interest in relocating to Jersey and in successful applications for high value resident status, with many such newcomers bringing their businesses with them. This is testimony not only to the fundamental attributes of the island for fiscal purposes and as a place to live and do business but also to the efforts of Locate Jersey and the business community generally in spreading the word that the island is well and truly open for business.