When establishing an investment vehicle, it is important to consider which type of vehicle will be most suited to the type of investment, its tax treatment, and the attractiveness or comfort of the proposed investment vehicle to the investors.
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With the introduction of the Separate Limited Partnership ("SLP") and Incorporated Limited Partnership ("ILP") Jersey today has one of the widest choices of legal entities, with the following forms of vehicles available for investment structures:
The SLP and ILP are variances of the standard Jersey limited partnership, which has been in existence since 1994. However, they differ in that each of them has their own 'legal personality', which is similar to the Scottish limited partnership format but without the additional accounting and disclosure burdens that come with it. Neither an SLP nor an ILP will be classed as a 'qualifying partnership' under The Partnerships (Accounts) Regulations
Furthermore, an SLP or ILP will have a wider scope of business than the Scottish limited partnership, which requires a purpose of "carrying on business with a view to profit" as opposed to SLPs and ILPs, which can be established for any lawful purpose.
The law governing SLPs is closely modelled on the Limited Partnerships (Jersey) Law 1994 ("LP Law"), save for the following key features:
The principal features of the ILP regime are summarised below:
An advantage of being a body corporate is that most jurisdictions generally accept that a body corporate is governed by the law of the jurisdiction in which it is incorporated. This might be particularly important if there were perceived to be any risk that a limited partner might otherwise be treated by a non-Jersey court as having unlimited liability.
SLPs and ILPs will be treated in the same manner as ordinary Jersey limited partnerships for Jersey tax purposes, and will therefore not be assessable to Jersey tax. It is anticipated that SLPs and ILPs will be tax transparent for the purposes of income and capital gains tax, meaning that the limited partners are taxed in their jurisdiction on the value of their interests in the partnership.
The tax treatment of Jersey limited partnerships, including SLPs and ILPs, and their partners may differ in other jurisdictions, so specific advice is recommended.
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