Israel – Jersey Tax Treaty

Applicability of the MLI

Both Jersey and the State of Israel have signed the Multilateral Convention, commonly known as the MLI. The MLI is a convention that is meant to fix double taxation treaties according to the BEPS framework.

Israel signed the MLI on the 7th of June 2017, with its provisions entering into force on the 1st of January 2019. Jersey, on the other hand, affixed its signature to the MLI on the 7th of June 2017, and its provisions became effective as of the 1^st of July, 2018.

Residency for Tax Purposes in Jersey

Residence of an Individual

A person is considered a resident for tax purposes in Jersey:

1. They spend a total of six months or more on the island during a tax year.
2. They have a home in Jersey that is available for their use, and they stay there for at least one night.
3. They visit Jersey regularly over several years for significant periods. The tax authorities usually consider an average annual stay of three months as “significant.”
4. They are “ordinarily resident,” meaning Jersey is where they usually live or are habitually based.

To read about how an individual is considered a resident of Israel, click here.

Residency of a Company

A company is considered a tax resident in Jersey if it is incorporated there or if its central management and control are based in Jersey. However, if a Jersey-incorporated company is managed and controlled in another country, it will not be treated as a Jersey tax resident, as long as specific conditions are met.

To learn about how a company is considered a resident of Israel, click here.

The Tax System in Jersey

Jersey Tax Authority is called the Revenue Jersey:

Income Taxation: 20%

Taxation of Companies and Branches: 0%, 10%, 20%

VAT: 5%

Capital Gains Tax: Not Applicable

Withholding Tax

Inheritance Tax in Jersey

Jersey does not apply an inheritance tax. However, a probate stamp duty will be charged on a deceased person’s moveable estate up to 0.75%.

Relocation to Jersey

Jersey is an inviting island characterized by a rich and diverse multicultural community, which makes it a safe and ideal location for families to establish their homes. Islanders take considerable pride in their relaxed yet high-quality lifestyle, with essential amenities (workplaces, schools, and residences) conveniently located nearby; this arrangement facilitates an excellent work-life balance.

Agriculture is intricately woven into Jersey’s cultural identity. Over half of the island’s land is dedicated to farming and the renowned Jersey Royal New Potatoes are exported globally (with more than 30,000 tons shipped annually). The island is also celebrated for its exceptional Jersey cows, which produce nearly 15 million liters of milk each year for Jersey Dairy. The unique tidal patterns of the island create an optimal environment for high-quality seafood. Oysters, crabs, and lobsters have been harvested in these waters for centuries, yielding over 1,000 tons of oysters produced each year.

More than 300 businesses within the agriculture and fisheries sectors bolster the island’s economy, employing thousands of workers, especially during the bustling summer and autumn months. However, while this economic activity is vital, it also brings challenges related to sustainability and environmental impact.

Beyond its abundant natural resources, Jersey boasts a dynamic shopping environment (which is noteworthy). St Helier, the capital city, showcases fresh produce markets, unique boutiques, and energetic shopping districts. This creates a vibrant retail sector that employs approximately 7,500 individuals, representing 12% of the workforce on the island. All these factors make Jersey not just a great place to live but also an attractive destination for investment.

Real Estate Taxation in Jersey

When renting out a property in Jersey, the income is required to be declared on the tax return. The profit will depend on:

• The amount of profit
• Your other taxable income
• Any tax exemptions, such as marginal relief

An individual living in Jersey for tax purposes, must also include income from foreign property.

If an individual is not a Jersey resident for tax purposes, will be taxed at 20% on any profit from property in Jersey. Property income also includes any one-time payments you receive when granting a tenancy, like lump sums.

Transfer of Funds from Israel to Jersey

According to section 170(a) of the Israeli Income Tax Ordinance, all payments transferred to non-Israeli residents are subject to a 25% withholding tax. However, this tax can be reduced or even waived if certain conditions are met. Our firm handles withholding tax matters with the Israeli Tax Authority.

In addition to assisting with withholding tax matters, our firm also helps with other issues related to transferring funds abroad. This includes providing an accountant’s approval regarding the payment of taxes, reviewing additional actions required under the CRS standard, and more.

Moreover, banks often raise many difficulties and charge high fees for converting shekels into other currencies. Therefore, consulting with a specialist before transferring the funds is highly recommended, click here to contact us.

For more information on money transfers abroad, click here.

Types of Business Entities in Jersey

Limited Liability Company: A limited liability company (LLC) is considered a separate legal entity from its members (owners), meaning it can own property, enter contracts, and be responsible for its debts. However, it is not classified as a “body corporate” under the law, meaning it does not have the same rights and duties as larger corporate entities like public companies.

Limited Liability Partnerships: Limited liability partnerships offer flexibility, combining elements of partnerships and limited companies. Partners have limited liability, meaning their assets are protected from business debts.

Limited Liability Partnerships: A limited liability partnership (LLP) is a business structure where individuals come together to run a business for profit, with each member contributing capital, effort, or skill. They agree that the business will operate as an LLP, and they share profits accordingly. Each partner is an agent of the LLP but not of each other, and their interests in the partnership’s property are defined in the partnership agreement.

Limited Partnership: A limited partnership does not have its own separate legal identity from its partners. It must include at least one general partner, who manages the business, and at least one limited partner, whose liability is restricted to the amount of their investment. There is no limit on the number of partners. Limited partners can be individuals or corporate bodies. The rights and responsibilities of limited partners are outlined in the limited partnership agreement.

Sole Traders: A sole trader is an individual who owns and operates the business alone. The individual is personally responsible for all debts and obligations of the business, making it a more straightforward option for small businesses or freelancers.

Trusts: A trust is a legal arrangement where a trustee holds property on behalf of a beneficiary (or beneficiaries), who may or may not be known at the time. The trustee manages the property for the benefit of others, not solely for their benefit. The trust can be created for a specific purpose or the benefit of a person or group, and the trustee is responsible for fulfilling the terms of the trust.

Incentive Laws in Jersey

Jersey, a British Crown Dependency, offers a highly competitive tax regime designed to attract businesses, investors, and high-net-worth individuals. The island applies a zero percent corporate tax rate for most companies, with exceptions for financial services entities taxed at 10% and utility companies taxed at 20%.

Additionally, Jersey does not impose capital gains tax, inheritance tax, or wealth tax, making it particularly appealing to affluent individuals and global businesses. The island’s low Goods and Services Tax (GST) of 5% further enhances its fiscal attractiveness. To ensure compliance with international standards, businesses must meet economic substance requirements, which promote genuine activity within the jurisdiction.

Jersey’s tax incentives, combined with its robust legal framework and status as a leading international finance center, solidify its position as an attractive destination for economic activity.

Jersey Double Tax Treaties