Jersey cuts top-rate income tax for wealthy migrant investors
Friday June 17 2011 | 02:16 AM

Jersey is introducing a new personal tax break to encourage high net worth foreigners to bring their businesses to the island.

The concession will be available to individuals who apply for Jersey residence under the 1(1)(k) rules, aimed at foreign investors. Until now such people have been taxed at a flat 20 per cent rate on their Jersey income, while marginal tax rates on foreign income are much lower.

According to Treasury minister Philip Ozouf, this tax differential discourages Jersey-based investors from funding businesses on the island.

So the 1(1)(k) regime is now being amended such that income above GBP625,000 will be taxed at only one per cent, whether earned within Jersey or abroad. Ozouf said this will make for "a simple and competitive tax structure to encourage high net worth individuals to bring their investment and businesses to Jersey."

The offer is available only to new applicants for residence, and they will still have to pay a minimum GBP125,000 in annual income tax. But according to the Treasury's tax chief Wendy Martin, the amendment will potentially bring more "super-rich immigrants" to Jersey.

The government is expecting to lose about GBP10 million per year in near-term tax revenues following the abolition of its deemed distribution rules (see STEP Wealth Structuring Digest, 19 May 2011). Its reform of the 1(1)(k) regime, along with other tax changes, is intended to compensate by increasing other revenues.