By Howard Mutti-Mewse
Twenty years after Jersey first introduced Limited Liability Partnerships (LLPs) a new framework will be introduced on 1 August 2018 which will make them even more attractive to local and international businesses.
The LLP Law provides a flexible option for undertaking a commercial activity with a view to profit with the benefit of limited liability and tax transparency for its participants. The LLP Law allows partners to contribute capital or skill to the venture as agents of the LLP but not of each other.
Jersey LLPs are useful for international tax planning arrangements deploying the fiscal transparency of the LLP concept. The LLP is also suitable for professional services businesses such as asset management, as components in family office and asset protection arrangements and for collective investment funds. Another advantage of a Jersey LLP is that the personal details of the partners are not publicly available, ensuring appropriate confidentiality.
The new rules simplify and improve Jersey LLPs by making changes to solvency requirements and the function and usage of LLPs said Mike Capraro, Head of Business Development ZEDRA Jersey. He added: “These latest changes to the regulations on LLPs make them more competitive than ever for businesses and also for investment activities. Jersey LLPs are very flexible and ZEDRA Jersey can help set up LLPs so that they are suitable for many different scenarios”.
A Jersey LLP must have at least two partners who may contribute capital or skill to the business of the LLP – for example, they could be joint owners of an asset management practice. While an LLP has its own legal personality separate from the partners, it isn’t a corporate body. A Jersey LLP is tax transparent so its activities are treated as being carried out by the partners. Distributions are made without the deduction of Jersey income tax: how the LLP partners are taxed on this depends on the rules in the country they reside in.