International Savings Plans guidance notes
International Savings Plans (ISPs) are income tax exempt, flexible, savings plans aimed at benefitting employees of multinational and international companies.
Section 1: background
1. this information has been prepared primarily for the use and assistance of persons who provide advice on or manage international savings plans in Jersey.
2. these guidance notes reflect legislative changes which have effect from 1 January 2019. They should not, however, be taken as a definitive statement of the law on any particular aspect, or in any particular case. In all cases Art 118D of the Income Tax (Jersey) Law 1961 (“Income Tax Law”) prevails.
3. any reference to a particular Article within these guidance notes means a reference to the Income Tax Law, unless otherwise stated.
4. members of an international savings plan should always make reference to the rules of the plan (or equivalent documentation) in order to understand the benefits that may be paid from the particular plan of which they are a member.
5. plans and their trustees must comply with any prescribed conditions and requirements; and any additional conditions and requirements imposed in its case by the Comptroller. These guidance notes outline a number of prescribed conditions and requirements which must be complied with by international savings plans.
Section 2: requirements of international savings plans under Art 118D
6. a plan must comply with the requirements of Art 118D(1) of the Income Tax Law in order to be an “international savings plan” and hence be entitled to the Jersey tax treatment outlined in section 4 below. The requirements of Art 118D(1) are outlined below:
7. requirement (1)(a): the plan must have for its sole purpose the provision of benefits in respect of the persons' employment wholly outside Jersey in a trade or undertaking.
8. for the purposes of determining whether employment is “wholly outside Jersey”, duties performed in Jersey, the performance of which is merely incidental to the performance of other duties outside of Jersey, is treated as performance outside Jersey.
9. if a part of a broader scheme has the purpose outlined in Requirement (1)(a), only that part of the plan must comply with the requirements of Art 118D(1) (i.e. Requirements (1)(a), (1)(b), (1)(c) and (1)(d)) and only that part of the plan will be entitled to the Jersey tax treatment outline in section 4 below.
10. requirement (1)(b): the plan must be established under irrevocable trust under Jersey law in connection with a trade or undertaking that is carried on: i) wholly or partly outside Jersey; and ii) by a person not resident in Jersey.
11. requirement (1)(c): the plan must have 2 or more trustees or a corporate trustee, subject to regulation by the Jersey Financial Services Commission under an enactment in respect of the carrying on of the business of trustee of the trust under which the plan is established.
12. requirement (1)(d): the plan cannot be a scheme approved under Part 19 of the Income Tax Law (i.e. the Part of the Income Tax Law relating to pension schemes).
13. for the avoidance of doubt, if an employer uses the same scheme to provide both retirement benefits as well as broader benefits, and the part of the scheme providing retirement benefits is approved under Art 131A, this does not prevent the part of the scheme relating to the broader benefits from meeting Requirement (1)(d). As noted in paragraph 9 in these circumstances only the relevant part of the scheme must comply with the requirements of Art 118D(1).
Section 3: notification of international savings plans under Art 118D
14. in order to be an “international savings plan” and hence entitled to the Jersey tax treatment outlined in section 4 below, the trustees of the plan must notify the Comptroller that it is an “international savings plan”.
15. the notification must be made in writing in the prescribed format. Under this prescribed format the trustees will provide relevant details regarding the plan and self-assess the plan’s compliance with the requirements in Art 118D(1) (see section 2 above).
16. there is no requirement for the trustees to provide the trust deed, the scheme rules or any other documentation as part of the notification process.
17. in response to a notification, the Comptroller will issue an acknowledgement to the trustees in the prescribed format within 21 days of the receipt of the notification by the Comptroller.
18. over time the Comptroller will undertake certain risk based compliance activities around schemes’ compliance with the requirements of Art 118D(1) (i.e. these compliance activities can take place at any point during the life-cycle of the scheme and are not limited to the notification period). The trustees will be required to provide any documentation/ information requested by the Comptroller as part of any compliance activities.
19. in order for the Jersey tax treatment outlined in section 4 below to be applied for a year of assessment, the notification must be received by the Comptroller before the end of the relevant year of assessment (i.e. in order for a plan to be entitled to the Jersey tax treatment for the 2019 year of assessment the notification must be received by the Comptroller by 31 December 2019).
20. for the avoidance of doubt, international savings plans will be prima facie entitled to the Jersey tax treatment for subsequent years of assessment (i.e. there is no requirement for a plan to make a notification in respect of subsequent years of assessment).
21. where the trustees become aware that a plan in respect of which the Comptroller has issued an acknowledgement under paragraph 17 no longer meets the requirements of Art 118D(1), they are required to notify the Comptroller of that fact within 30 days of the date that they become aware.
22. where the Comptroller receives a notification under paragraph 21, the Comptroller will issue an acknowledgement to the trustees outlining the date from which the tax treatment outlined in section 4 below no longer applies.
23. the Comptroller may issue a notification to the trustees of a plan where the Comptroller considers that the requirements of Art 118D(1) have not been met by the plan. The notification must outline the date from which the tax treatment outlined in section 4 below no longer applies. For the avoidance of doubt, in appropriate circumstances the date from which the tax treatment outlined in section 4 below no longer applies may be earlier than the date on which the Comptroller issues the notification.
Section 4: Jersey tax treatment of international savings plans
24. income derived from the investments and deposits of an international savings plan under Art 118D shall be exempt from Jersey income tax under Art 118D(4).
25. benefits paid from an international savings plan to a person who is not resident in Jersey shall be exempt from Jersey income tax under Art 118D(3) (i.e. the recipient of the benefits will not be subject to Jersey income tax and the scheme will not be under an obligation to withhold Jersey income tax from the benefits paid).
26. the exemption outlined in paragraph 25 does not apply where benefits are paid to a person resident in Jersey who will be subject to tax on the benefits under the provisions of the Income Tax Law.
27. for the avoidance of doubt, there will be no tax relief in Jersey for any contributions/ payments made to an international savings plan.
Section 5: benefits paid from international savings plans and transfers to/from international savings plans
28. the benefits paid to a member (including loans) from international savings plans will be made in accordance with the plan’s own rules. For the avoidance of doubt there are no age restrictions regarding when a plan may pay benefits to plan members.
29. the plan’s own rules may permit one or more loans to be made to a plan member, however any such loan(s) must not exceed 30% of the aggregate value of the benefits which have been accrued in respect of that member.
30. transfers to and from an international savings plan are governed by the plan’s own rules.
31. the rules of a plan may provide for its discontinuance because of the bankruptcy or liquidation of the employer or, at the discretion of the employer. However, the rules must also provide that on discontinuance the benefits then accrued by members of the plan will be preserved for their benefit. The Trustees will discuss and agree with the members of the plan how these benefits should be distributed.
32. where a plan’s rules permit “surplus” funds to be returned to the employer, the rules must include provisions to the effect that any such funds returned cannot contain, without the affected members’ consent, contributions made by the members or benefits which have vested in respect of the members.
Section 6: annual reporting requirements
33. international savings plans will be under an obligation to provide relevant information to the Comptroller on an annual basis by way of a return, details of these reporting requirements will be provided in a later version of these guidance notes.
Prescribed format for ISP notification to the Comptroller
Use this format to notify the Comptroller of an International Savings Plan.
ISP Notification Format
Prescribed format for acknowledgement of ISP notification
Revenue Jersey will acknowledge an ISP notification in the following format.