The Crown Dependencies – the Channel Islands and the Isle of Man

Abstract

This working paper provides a brief overview about the Crown Dependencies with the Channel Islands Guernsey, Jersey, Alderney, and Sak as well as the Isle of Man as autonomous states. The United Kingdom is responsible for foreign relations and defense while the head of states is the King as Duke of Normandy and Lord Mann. Each of these states has its own government, parliament, legal and fiscal system. They were never part of the United Kingdom or of the European Union, but the inhabitants are British citizens. The term “Crown Dependencies” is increasingly used since the 1980ies and replaced the term “British Islands”. The Crown Dependencies are the Bailiwick of Jersey, the Bailiwick of Guernsey with the separate jurisdictions of Guernsey, Alderney and Sark and the Isle of Man. For legislation, the Crown is acting through the Privy Council, i.e., the royal advisory council. Laws made in Jersey, Guernsey, Alderney, and Sark require Royal Assent by the King in Council (i.e., the Privy Council with presence of the King) while on the Isle of Man, the Lieutenant-Governor can give Assent on behalf of the king for domestic laws. The Crown Dependencies cannot sign international agreements as they are not sovereign which makes e.g., impossible to sign treaties with the EU. Ater the Brexit vote, the UK and Ireland agreed on a Common Travel Area (CTA) with open border and it was clarified that this includes the Crown Dependencies as well. The Crown Dependencies participate in the UK-EU Trade and Cooperation Agreement (TCA) for fisheries and the trade in goods while for other matters like finance the Islands are treated as third countries. Current topics are legal debates and discussions about taxation practices. The current relation is based on traditional political practices, but was never enshrined in any formal constitutional document. In 2024 the UK government stated that any attempt to codify or prescribe the relationship could risk undermining the flexibility and adaptability that has been beneficial to the relationship. In practice, this sometimes leads to frictions. The Crown is responsible for “good government”. A debate whether the good government rule could be used to urge the Crown Dependencies to apply public ownership registers showed that the lack of a formal framework could open the door to restrict the autonomy by a wider interpretation of the good government rule, but could also result in a demand for greater independence. A further issue is the tax system. While the status as tax haven is disputed, the Crown Dependencies are attractive for wealthy persons and organizations, as for various income types either no or low rates or a maximum tax cap irrespective of income are applicable. The other issue is the transparency of ownership. Only if the beneficial (ultimate) ownership is known, i.e., who ultimately owns or controls an asset (for example, a property or a company) and really gets the money from something, it is possible to apply taxation. In difference to the UK legislation, the registers of the Crown Dependencies were not available to the public, but restricted to law enforcement authorities and obliged entities (organizations that e.g., combat money laundering). The Crown Dependencies argued with privacy concerns while the United Kingdom supports transparency. Since 2025, all three Crown Dependencies launched consultations into extending the right of access to persons with a legitimate interest. In summary, the past decade with the Brexit and the taxation debate brought a new dynamic into the relations between the United Kingdom and the Crown Dependencies