Monthly Archives: September 2014

Funds value passes £200 billion mark during stable quarter

September 15th, 2014 by

The latest figures for all sectors of Jersey’s finance industry show stability and signs of new growth, led by the funds sector where the value of funds business passed through the £200 billion mark for the first time since June last year.

The statistics highlight that the net asset value of funds increased by £5.1 billion in the second quarter of 2014 to just over £200 billion, with the increase most notable in real estate funds which shows growth of nearly 20% during the quarter. Although bank deposits fell slightly, they remain stable and Geoff Cook, chief executive, Jersey Finance Limited, described the picture overall as showing ‘clear signs of recovery.’

The latest statistics, collated and prepared by the Jersey Financial Services Commission, are for the three month period ending 30th June, 2014. Headline figures include:

  • The total value of banking deposits held in Jersey decreased by £0.3bn from £139.2bn to £138.9bn during the second quarter of 2014.
  • The net asset value of funds under administration increased by £5.1bn from £195.3bn to £200.4bn during Q2 2014.  The total number of regulated collective investment funds decreased by 54 from 1,337 to 1,283 over the same period.
  • Consent was granted in respect of 27 COBO only Private Placement funds since inception with a reported total NAV of £593m.
  • The total number of unregulated funds increased by 3 from 199 to 202 during the second quarter.
  • The value of total funds under investment management decreased slightly by £0.4bn from £22.2bn to £21.8bn during the second quarter of 2014.
  • The total number of live companies increased by 506 to 33,207 at the end of Q2 2014.

Geoff Cook, Chief Executive, Jersey Finance, commented:

“The latest statistics show another quarter of stability in the performance of the finance industry.  The increase in funds business is due to the general improvement in market conditions, specifically in property fund valuations. The increase also takes into account a number of new fund launches established in the last few quarters reporting for the first time, while the reduction in the number of regulated funds relates to relinquished certificates for funds which have become inactive. The small decrease in bank deposits is mainly due to the significant strengthening of sterling, which decreased the sterling value of foreign denominated deposits by around £2.2 billion.”

He added:

“It was encouraging to see an increase in the number of Jersey companies, now the highest number of company incorporations since 2008 and with the recent introduction of innovations to our companies law on the statute, Jersey is an even more attractive proposition for investment structuring, asset holding and a wide variety of other purposes. The strength of the industry continues to be in its diversity and it is very encouraging to see clear signs of recovery across a range of sectors.”

First published by Jersey Finance Limited, September 2014.

Jersey – the place for real estate investment funds

September 4th, 2014 by

Jersey has long been seen as a key centre for developing real estate investment options. The island’s fund industry has evolved over the last 30 years as a major centre for global investors looking to establish tax efficient real estate funds which would enable them to move into property markets, particularly in the UK and Europe.

Using offshore investment vehicles can have many benefits for investors. Tax transparency, particularly in a well-regulated jurisdiction such as Jersey, flexible regulatory environment, and increased liquidity being several of the key points. Depending on where funds invest there can also be advantages such as, when investing into the UK, the way stamp duty is applied, along with capital gains and inheritance taxes.

While investors use Jersey as a base for investment vehicles for various asset classes, UK and continental European real estate investment is the biggest overall contributor to assets under management in the island.

There are several reasons for the growth of the real estate funds industry. As outlined above there are specific advantages to using an international finance centre for holding an investment structure. However what makes Jersey stand out is not just the tax efficiency but the expertise of the professional community in the island. Lawyers, accountants, bankers and fund administrators are all well experienced in this field and can provide the advice, skills and knowledge promoters and investors need to move their funds forward. It is no coincidence that where this expertise is located ‘under one roof’ investors are flocking to the island to utilise those skills to their benefit. With three decades experience of real estate funds Jersey’s finance industry is well placed to provide an excellent service to both promoters and investors.

Where this experience really tells is in reacting to new legislation, restrictions and regulations. Practitioners in Jersey have a proven track record in managing complex and specialised structures through regulatory change; they have prospered where other jurisdictions have struggled to come to terms with changes and updates. Recent updates and reaction to issues such as Basel III and AIFMD, plus disclosure agreements such as FATCA show that the island’s financial sector retains a nimbleness that serves it well.

What does a real estate investment look like?

Investments funds domiciled in Jersey can be structured as open or closed-ended vehicles and corporate structures such as companies, limited partnerships, unit trusts, protected cell companies and incorporated cell companies can be utilised. The Jersey Financial Services Commission oversees and regulates various different fund categories including Very Private Structures, Private Placement Funds / COBO only funds, Expert Funds, Listed funds Unclassified Funds and recognised Funds to suit the different requirements of investors and promoters.

With so much experience on the island in the form of advisors and financial services professionals promoters and investors can be reassured that they will be recommended the most appropriate structure. These might vary between straightforward company structures or a complex fund defined by institutional investors.

What are the tax efficiencies available?

In the majority of cases it is possible to transfer UK based property in a Jersey domiciled structure without paying stamp duty. By using a Jersey company to hold the real estate, an investor can arrange for shares in the company to be transferred rather than buying or selling a property outright. Stamp duty land tax does not apply to transfers of interests in structures holding UK property. Properties held via a Jersey structure are also not subject to capital gains or inheritance tax in the UK.

In addition to this benefit, holding a property within a Jersey structure means that investors can apply for the UK’s non-resident landlord scheme. This is relevant where the property is held for commercial purposes as a rental investment and takes advantage of the double tax treaty between the UK and Jersey to optimise the tax treatment of the company.

Further tax benefits can be gained by looking at income tax. A limited partnership will generally be deemed to be transparent for UK tax purposes. Therefore any income or capital gains are viewed as directly attributable to the partners. They are therefore taxable against their own tax position.

What about taxes in Jersey?

Jersey’s corporate tax environment is very favourable. Structures established and administered in the island, whether they are a company (open-ended or closed-ended), a unit trust or a limited partnership, are exempt from taxation in Jersey. Withholding tax is also not imposed on dividends or payments made by the company.

Jersey’s tax system does not include provisions for stamp duty, inheritance tax or capital gains tax, nor corporation tax nor VAT. Investment vehicles established in the island have therefore a limited tax footprint here, leaving them free to manage their overseas tax affairs in the most efficient way possible.

Why Jersey?

The combination of tax transparency, tax efficiency and a well-stocked pool of financial services practitioners make Jersey an excellent jurisdiction for the establishment of real estate investment funds. The island’s flexible regulatory regime, particularly with regard to fast-track establishment of companies is also a real benefit to investors in the real estate space and this is a key part of the island’s continuing position as a leading real estate centre.

First published by the Jersey Evening Post, September 2014

Expo Real 2014

September 1st, 2014 by

We will be in Munich again this year from 6th – 8th October 2014, attending Expo Real – the International Trade Fair for Commercial Property and Investment.

We would welcome the opportunity to meet with you or one of your colleagues.

Please contact us if you would like to arrange a meeting or visit us at the event – Hall A1, stand 521.

Auch in diesem Jahr werden wir wieder an der EXPO REAL, Internationale Fachmesse für Gewerbeimmobilien und Investitionen, vom 6. – 8. Oktober 2014 in München teilnehmen.

Bitte vereinbaren Sie einen Termin mit uns oder besuchen Sie einfach unseren Stand Nr. 521 in der Halle A1.

Wir freuen uns auf die Gelegenheit, Sie oder einen Ihrer Kollegen dort zu begrüßen.