VAT, GST and Sales Tax in Jersey

Summary

Name of the tax Goods and services tax (GST)
Date introduced 6-May-08
Trading bloc membership Part of the EU for customs by agreement with the United Kingdom but not a Member State
Administered by Comptroller of Taxes (http://www.gov.je/taxesmoney)
GST rates
Standard 5%
Other Zero-rated and exempt Flat rate International Services Entity (ISE) fee (predominantly financial services entities)
GST return periods Quarterly, Monthly (other periods on request)
GST registration number format 1234567
Thresholds
Registration GBP300,000
Recovery of GST by non-established businesses Yes (subject to conditions)

Scope of the tax

GST applies to the following transactions:

  • The supply of goods or services made in Jersey by a registered person
  • The importation of goods into Jersey, regardless of the status of the importer
  • The supply of a service outside Jersey if all of the following conditions apply:
    • The supply is a taxable supply.
    • The service is specified in schedule 3 of the GST law (reverse charge to GST).
    • The recipient is a Jersey resident.
    • The service is performed in connection with a person, place or thing in Jersey, or is taken to be so performed.

Businesses (predominantly in the financial services sector) may be exempted from GST accounting if they obtain approval for International Services Entity (ISE) status (see Section D).

Who is liable

A “registered person” is a business entity, including a branch or agency, or individual who makes taxable supplies of goods or services in the course of doing business in Jersey.

The GST registration threshold is JEP300,000.

The registration threshold is met if either of the following cir­cumstances exists:

  • If, at the end of any month, the business made taxable supplies in the preceding 12 months
  • If, on any day, reasonable grounds exist for believing that the value of the taxable supplies made by the business in the 12 months after that date is likely to exceed JEP300,000

GST may be recovered before the incorporation of a company if certain criteria are met.

Voluntary registration. A small business with taxable turnover of less than JEP300,000 a year may voluntarily apply to become a registered person. However, the value of exempt supplies cannot be included in calculating the taxable turnover. If the only sup­plies of goods and/or services are exempt, it is not normally pos­sible to register for GST.

Group registration. Group registration is allowed for corporations or other taxable persons that are under common control. One entity must be the representative member.

Transactions between group members are disregarded for GST purposes.

As an alternative to GST registration, businesses in the financial services industry that predominantly serve nonresident clients may opt to pay an annual fee and be listed as International Service Entities to reduce their compliance and administrative obligations.

Registration procedures. For companies that already have an income tax reference number, the application can be submitted online (https://empret.jsytax.je/gst_main.aspx). For other compa­nies, a form can be obtained from the Jersey Income Taxes Office.

A company will need to register once if it has made taxable sup­plies of GBP300,000 or more in the preceding 12 months or if it is believed that the value of taxable supplies for the following 12 months is likely to exceed GBP300,000. It may also choose to register voluntarily.

The information that will need to be supplied for the application include: details of the person or entity applying for registration; the trading name (if different); the business address; relevant telephone numbers; and the name and legal status of the person making the application. In addition, during the registration pro­cess the Jersey Income Taxes Office will request the expected annual taxable turnover; the nature of the business; and if there is any preference with regard to the months that the entity wishes to make its quarterly GST returns.

There is no restriction on who can make the registration on behalf of the company, but the registered person will be the legal entity that owns the business (for example, a limited company).

There is a different form for registering as an ISE.

Late-registration penalties. Penalties are assessed for a range of GST offenses, including late registration.

Reverse charge. The reverse-charge regime applies to services specified by the law if the following conditions are satisfied:

  • A supply of services is made by a nonresident to a resident.
  • The supply would be taxable if made in Jersey.
  • The recipient of the supply is registered (or is required to be registered).

An input tax credit may be claimed with respect to the reverse charge to the extent that the service was acquired for the purpose of making taxable supplies.

Non-established businesses. Please see Section G.

International Services Entities. Certain entities, predominantly financial services entities, may opt out of the GST system by becoming an International Services Entity (ISE). Generally, an entity meets the requirements of an ISE if not more than 10% of its supplies are to individuals resident in Jersey. GST is not chargeable on supplies to ISEs. If the entity obtains approval for ISE status, it pays an annual fixed fee.

Trust companies can also be authorized to maintain a list of administered entities that are ISEs. Under the ISE regime, busi­nesses are not required to account for GST on their supplies and are entitled to end-user relief under which they are not charged GST by GST-registered businesses.

A business may be charged on retail purchases of less than JEP1,000, but the GST may be refunded on application.

The following fees are payable for each calendar year for an ISE entity:

  • Bank (deposit-taking business): JEP50,000
  • Trust company business: JEP7,500 as an affiliation leader and JEP200 for each administered entity
  • Fund service business not registered as a managed manager: JEP2,500
  • Entity holding a Collective Investment Fund (CIF) permit as a functionary but not as a managed manager or collective investment fund: JEP2,500
  • Entity holding a CIF permit as a managed manager: JEP500
  • Collective investment fund if listed by the Comptroller of Taxes: JEP200
  • Entity that is a body corporate or partnership, limited partner­ship or limited liability partnership, which is not included above: JEP200

Digital economy. No special rules apply.

Deregistration. A taxable person that ceases to make taxable sup­plies must notify the Jersey GST authorities within 30 days after ceasing operations. If the GST authorities are satisfied that the taxable person’s operations are not expected to recommence, they will cancel its GST registration.

A taxable person may deregister voluntarily if it can satisfacto­rily prove to the GST authorities that its taxable turnover for the foreseeable future is expected to be less than JEP300,000.

GST rates

The term “taxable supplies” refers to supplies of goods and ser­vices that are liable to GST. The standard rate of GST is 5%. Some supplies are zero-rated (taxed at 0%), but no other reduced rates apply.

Examples of goods and services taxable at 0%

  • Supplies of dwellings
  • Prescription medicines
  • Exported services and related services
  • Services performed outside Jersey

In addition, some activities are exempt from GST. For exempt activities, no GST is charged, but the supplier does not have the right to deduct any related input tax.

Examples of exempt supplies of goods and services

  • Financial services
  • Insurance
  • Postal services
  • Medical and paramedical supplies
  • Supplies by charities
  • Education
  • Child care (supplied in registered day care accommodation under the Day Care of Children (Jersey) Law 2002)
  • Burial and cremation

Option to tax for exempt supplies. Not applicable.

Time of supply

The time when GST becomes due is called the “time of supply.” The general rule is that a supply of goods takes place when the goods are removed or made available and that a supply of ser­vices takes place when the service is performed. However, if an invoice is issued or payment is received by the supplier prior to these times, the earlier date of the invoice is the time of supply.

Imported goods. The time of supply is the date the goods are imported.

Reverse-charge services. The time of supply is the date the supply of services takes place.

Continuous supplies of services. The time of supply is the date payment is received, or if an invoice for the services is issued before the payment is made, the time of supply is the date of the invoice.

Prepayments. The time of supply is the date payment is received, or if an invoice is issued before the payment is made, the time of supply is the date of the invoice.

Leased assets. The time of supply is the date payment is received, or if an invoice is issued before the payment is made, the time of supply is the date of the invoice.

Recovery of GST by taxable persons

A taxable person may recover input tax, which is GST charged on goods and services supplied to it for business purposes. A taxable person generally recovers input tax by deducting it from output tax, which is GST charged on supplies made. Input tax includes GST charged on goods and services supplied in Jersey and GST paid on imports.

Nondeductible input tax. Input tax may not be recovered on pur­chases of goods and services that are not used for business purposes (for example, goods acquired for private use by an entre­preneur).

A registered person may recover GST in full if it acquires goods and services principally for the purpose of making taxable sup­plies.

Examples of items for which input tax is nondeductible

  • Employee wages
  • Private expenses or goods
  • Certain goods incorporated in dwellings

Examples of items for which input tax is deductible
(if related to a taxable business use)

  • Raw materials used in the business
  • Equipment (capital/office)
  • Goods for resale
  • Processing costs

Partial exemption. GST law provides for the partial exemption method if goods and services are acquired for making taxable supplies but are also used for making exempt supplies. One of the following methods of allocation may be used for making the input tax adjustment:

  • A general pro rata method under which the taxable person’s tax­able ratio is based on the value of taxable supplies made com­pared with total supplies made. The taxable ratio is applied to the total amount of input tax incurred.
  • A direct attribution method under which the taxable person’s input tax is allocated to taxable and nontaxable supplies made. Input tax directly related to taxable supplies is deductible in full, while input tax directly related to nontaxable supplies is not deductible. The general pro rata method is used with respect to the remaining input tax that is not directly related to taxable or nontaxable supplies.
  • A special calculation method agreed on with the Jersey GST authorities.

Capital purchases in excess of JEP1 million (excluding GST) that are not zero rated or exempt from GST must be considered over a five-year period.

Refunds. If the amount of input GST recoverable in a period exceeds the amount of output GST payable, a refund may be claimed. GST refunds are generally made promptly after the receipt of a correct return or held as a credit against future returns unless otherwise requested.

Visitors to the island who arrive on commercial flights are enti­tled to claim a refund of GST paid on goods bought from local retailers participating in the GST visitor refund scheme. The total value of the goods must exceed JEP300, the purchase must be made in a single transaction with a single retailer, and the visitor must leave Jersey with the goods within one month of the date of purchase.

Preregistration costs. Not applicable. Capital goods. Not applicable.

Write-off of bad debts. GST will be refunded by the comptroller if certain conditions are satisfied when a claim is made.

Noneconomic activities. The comptroller has issued a direction to the law stating that a charity or nonprofit organization shall be relieved of charge to GST on goods imported into Jersey if it is established for:

  • The advancement of education
  • Relief of poverty
  • Purposes benefiting the community
  • Furtherance of religion
  • Cultural or artistic objectives financially supported by the States of Jersey.

Recovery of GST by non-established businesses

Entities that are registered for GST and that make taxable sup­plies in Jersey may recover GST incurred on goods and services that they acquire.

Effective from 1 January 2010, refunds are made to persons not established in Jersey with respect to GST on goods and services for business use. The supply on which the GST arose must have been for the purpose of a business carried on by the claimant. The claimant’s home country must operate a similar refund scheme that is available to Jersey businesses.

Refunds are made by way of a claim in writing to the following:

Comptroller of Taxes

P.O. Box 56

Cyril Le Marquand House

The Parade

St. Helier

Jersey JE4 8PF

Jersey has not set a maximum amount that can be reclaimed. However, it has set a minimum reclaim amount of JEP50. Claims must be made within 12 months after the date of supply and must be made annually.

Claims must be accompanied by originals of all invoices, vouch­ers or receipts from suppliers. For amounts below JEP250, sim­plified invoices can be provided. Initial claims must also be accompanied by an official certificate showing that the claimant is registered for GST (or similar tax) in its home jurisdiction. A certificate must be provided annually thereafter.

Invoicing

A Jersey registered person must generally provide a tax invoice for all taxable supplies. A credit note may be used to reduce the GST charged and reclaimed on a supply if the value originally charged was incorrect. A credit note must indicate the reason why it was issued and must refer to both the GST originally charged and the corrected amount.

Foreign-currency invoices. Foreign-currency invoices must be translated into GBP invoices using the exchange rate effective on the date of the supply for inclusion on the GST return. The Taxes Office may request evidence to support the exchange rate used.

Electronic invoices. No specific requirements apply to electronic invoices additional to those that apply to paper invoices.

Proof of export. Not applicable.

B2C invoices. Not applicable for telecommunications broadcast­ing.

GST returns and payment

GST returns. GST returns are generally submitted quarterly. Three cycles of quarterly returns are provided to stagger submis­sion dates. A taxable person may request a change in its GST return cycle to ease administration.

Taxable persons may opt to submit GST returns monthly if they receive regular repayments of GST.

GST return periods generally end on the last day of a month. How­ever, taxable persons may request different periods to align with their accounting records. GST returns must be submitted, togeth­er with payment of any GST due, by the last business day of the month following the end of the return period. The GST return form indicates the due date for each return.

Special schemes. The GST annual accounting scheme for small businesses requires only one return per year. The scheme can be used if the entity’s taxable turnover, excluding GST on sales, for the previous 12 months did not exceed GBP500,000. The scheme can continue to be used until the taxable turnover for a year exceeds GBP600,000.

The GST cash accounting scheme for small businesses allows entities not to pay GST on sales until payment is received from the customer. The scheme can be used if taxable turnover (excluding capital assets or GST) for the previous 12 months did not exceed GSP1 million. The scheme can continue to be used until the taxable turnover for a year exceeds GBP1.2 million.

Electronic filing. GST returns can be filed online. They can also be filed using the Tax Returns Submission System (TRSS), where returns are downloaded, completed offline and then sub­mitted by email or data stream via a secure connection. Alternatively, they can be submitted in paper format.

Annual returns. See Special schemes above.

Penalties

A penalty is assessed for the late payment of GST. A penalty of 2.5% of the tax due is assessed on the day after the due date.

A penalty of JEP50 is charged for the late submission of a GST return.

A range of GST offenses are subject to fines and imprisonment, depending on the offense committed.