Transfers between the UK and Jersey are, according to the UK Supreme Court, within the scope of the freedom of movement of capital under what is now article 63 of the Treaty on the Functioning of the European Union. 

Routier v HMRC concerned a potential liability to UK inheritance tax in respect of the gift of assets in the United Kingdom to trustees of a charitable trust in Jersey. 

In international law, Jersey is not recognised as a state independent from the UK. The UK's tax authority argued that, consequently, the movement of capital between the UK and Jersey should be regarded as an internal transaction, taking place within one Member State for the purposes of article 63 (meaning that article 63 would not apply). 

Having reviewed the relevant CJEU jurisprudence, the UK Supreme Court, however, concluded that the question whether, for EU law purposes, a territory is to be regarded as a third country depends on the context. If the relevant provision does not apply to the territory as it does to a Member State, the territory should be regarded as a third country. Otherwise, it should not. 

Given that article 63 applies to the UK, but not to Jersey, Jersey should, consequently, be treated as a third country for the purposes of article 63. 

This is a welcome conclusion for taxpayers.