JERSEY Law and Practice Contributed by: Nienke Malan and Christopher Griffin, Carey Olsen
of an income nature, investors who are Jersey- resident individuals will need to declare and pay Jersey income tax in the usual manner (this is the case regardless of whether the fund is domiciled in Jersey or elsewhere), but there is no capital gains tax in Jersey. Non-Jersey investors should seek taxation advice in their own countries of residence to ensure that an investment is suit - able for them. Tax Treaty Network Please refer to FATCA and CRS Regimes , for details of the information exchange arrange - ments relating to FATCA and the CRS. The main impacts of those arrangements are that certain information regarding funds’ investors is required to be collected and reported by Jer - sey funds, and that information may, in turn, be shared between the Jersey and other countries’ taxation authorities. Jersey also has information exchange and/or double taxation agreements with a number of countries, and is able to comply with all required international reporting and transparency require - ments. FATCA and CRS Regimes Jersey has concluded an intergovernmental agreement (IGA) with the USA to implement FATCA. Jersey funds are generally foreign (non- US) financial institutions for these purposes, and will need to provide information about the iden - tity of limited partners who are US persons or limited partners with beneficial owners who are US persons to the Comptroller of Taxes in Jer - sey, who will then forward that information to the competent authority in the USA. Provided that a fund complies with its obligations, it should not incur any FATCA withholding taxes.
In addition to the IGA entered into with the USA, the States of Jersey and the UK govern - ment have entered into an inter-governmental agreement (UK IGA, and together with the US IGA, the “IGAs”) for the implementation of information-exchange arrangements, based on FATCA, whereby relevant information reported to the Jersey authorities in respect of a person or entity who is resident in the UK for tax purposes is shared with the UK’s HMRC. Under the UK IGA, Jersey funds may be required to provide information to the Jersey authorities about their investors and such person’s beneficial owners and interests in the fund in order to fully dis- charge their reporting obligations; in the event of any failure or inability to comply with the pro - posed arrangements, they may suffer a financial penalty or other sanction under Jersey law. The OECD has since released the Standard for Automatic Exchange of Financial Account Infor - mation in Tax Matters (CRS), following approval by the OECD Council. This includes a model regime to serve as the common standard on reporting and due diligence for financial account information. Like FATCA and the IGAs, the CRS requires financial institutions in participating jurisdictions to follow common due diligence procedures and to report specified financial information to their tax authorities, which is then automatically exchanged with other participating jurisdictions. Jersey is committed to domestic implementation of the CRS, and Jersey funds are usually expected to be financial institutions for CRS purposes. Economic Substance Regime Jersey has implemented economic substance legislation, whereby any company which is resident in Jersey for tax purposes, and which receives income from activities such as fund management in Jersey, is required to meet an
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