Offshore Trusts Report: Jersey
Legal Framework and Formation Rules and Fees
Jersey trusts are governed by The Trust (Jersey) Law
1984, as amended in 2006, which codified trust law largely along
the lines of English-based common law, and the Trusts (Amendment)
(Jersey) Law 1989. Trust company business is regulated under the
provisions of the Financial Services (Jersey) Law 1998.
Appeal against judgements of the Royal Court of Jersey
lie to the Jersey Court of Appeal and finally to the English Privy
Although Jersey law has its roots in the Norman law
(a 'Roman' or 'Civil' law code), the Trusts (Jersey) Law 1984 codified
an entirely 'Anglo-Saxon' body of trust law, resolving many uncertainties
and increasing protection for beneficiaries. Subsequent amendments
included the recognition of 'purpose' trusts in 1996 (the normal
form of Jersey trusts is 'discretionary'). This has led to an increase
in corporate use of Jersey trusts.
Jersey is a party to the Hague Convention
on the Law Applicable to Trusts and Their Recognition. Jersey trust
law explicitly excludes foreign inheritance laws and does not recognize
Trust management, particularly for wealthy UK individuals, was
Jersey's traditional business, but successive tightenings of UK
anti-avoidance legislation have reduced the possibilities for UK
citizens. However, Jersey's trust business has continued to grow
based on a more international clientele, and following the introduction
of the purpose trust, a surge in corporate trust work and the recent
introduction of Foundations. There are also Collective Investment
Funds based on trusts.
The creation of a trust is free from Government duty and there
are no registration or audit requirements as such in Jersey, although
the tax authorities of beneficiaries' jurisdictions (eg the UK)
may require annual reports. Jersey trusts may 'migrate' to other
jurisdictions by changing trustees and the applicable law of a trust;
likewise, foreign trusts may migrate to Jersey.
The trustees of a non resident trust are not required to make
returns or provide accounts of the trust to the Comptroller of income
tax. Trust accounts must be kept and trust documents are normally
In the case where the beneficiaries of a Jersey trust are non resident,
income arising from sources outside Jersey is not liable to income
tax in Jersey, nor are distributions to the beneficiaries. This
exemption is automatic, and does not need to be applied for.
Interest on bank deposits made by the trustees of a nonresident
trust is not taxed because of a government concession.
However, if any of the settlor, the life tenants or the beneficiaries
are Jersey-resident, the tax picture becomes more complex, and exemption
from Jersey tax will be partial, at best; however if only the settlor
is Jersey-resident, full exemption may be available on application
to the Comptroller, subject to stringent conditions. If tax is due
on a Jersey trust, then it is assessed on the trustee; a non-resident
trustee will however be assessed only on income arising in Jersey.
There are no special provisions in Jersey law covering Unit Trusts,
which are therefore treated in the same way as ordinary Jersey trusts,
and have the same tax regime.