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07 March 2013
There is an increasing need for businesses to ensure that they can demonstrate proper substance in the jurisdictions in which they operate. Many cross-border financing, asset holding or investment structures are coming under scrutiny by various tax or regulatory authorities around the world. Jersey is ideally placed to provide proper substance and a permanent establishment in a tax-neutral environment.
Over the past decade Jersey has already seen many private equity, mining and other businesses develop their businesses and operations in the country. Many of these started out with small sub-let premises or simply desk space with a company administration service provider in Jersey. Some have not needed to grow further than engaging a single part-time employee, but others have gone on to develop a significant presence with executive directors and a team of administration and industry experienced employees physically based in Jersey and operating from dedicated office premises.
There are a number of commercial and structural benefits of using a Jersey company as part of creating a permanent establishment in Jersey. The most significant of these include:
Unlike the United Kingdom, Jersey lacks a network of double tax treaties and thus has no material treaty-shopping provisions. This may restrict the ability to structure a deal to obtain tax benefits if, for example, the company suffers foreign withholding tax on loans or investments. However, jurisdictions such as Ireland or Luxembourg may instead be used because of such tax treaty networks.
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