Guernsey Announces Savings Tax Directive Results

by Amanda Banks, Tax-News.com, London

16 June 2006

After Jersey announced its 'take' of GBP13m from the EU's Savings Tax Directive earlier this week, Guernsey has followed up, revealing collections of GBP4.5m of withholding tax in the first six months of the STD regime.

The Guernsey Administrator of Income Tax announced yesterday that in the initial 6-month period since the implementation of the bilateral savings tax agreements with the 25 EU Member States, approximately GBP4.5 million of retention tax has been collected by Guernsey’s Income Tax Office.

Of this sum 25% (approximately £1.125 million) will be retained by the States of Guernsey the balance being passed over to the relevant Member State, in accordance with the terms of the agreements.

Under those agreements, EU resident individual investors have the option of receiving interest gross by opting for information on their savings income to be exchanged with their domestic tax authority. It is estimated that over 57% of interest which falls within the scope of the agreements has been returned under this option.

Administrator of Income Tax, Ken Forman, said that: ‘The process of exchanging information and retaining tax has worked well and now that the template is in place there will be less of an administrative burden in the future both for our office and paying agents. I am conscious of, and am grateful for, the resources which Guernsey paying agents have put into implementing the necessary systems, which has enabled the first submissions of tax and information to be made relatively smoothly’.

On 21st June 2005, the Guernsey States agreed to adopt equivalent measures with EU Member States to be implemented through bilateral agreements. The Directive was implemented on 1st July 2005 by the EU Member States. From the same date Guernsey introduced domestic legislation to give effect to the bilateral agreements. A number of other dependent or associated territories of the Member States together with certain third countries (Switzerland, Andorra, Liechtenstein, Monaco and San Marino) implemented similar measures from the same date.

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