Guernsey Confirms Information Exchange Move

by Jason Gorringe, Tax-News.com, London

02 December 2010

Guernsey’s States of Deliberation has confirmed the timetable for movement to automatic exchange of information under the equivalent measures Guernsey adopts relating to the European Union (EU) Savings Tax Directive.

The government announced that the move towards full exchange of information with EU member states will take effect on a "from but by" basis, from January 1, 2011 and by no later than July 1, 2011. This transition period is intended to provide the maximum flexibility for industry in making necessary adjustments to their software systems.

The intention to move to automatic exchange was communicated in a July statement to the States by the Chief Minister, Lyndon Trott, following a formal consultation process.

The introduction of such a regime is seen as a move towards greater tax transparency, abolishing the existing option to pay a withholding tax on interest income, avoiding disclosure.

Under the European Savings Tax Directive, the majority of non-EU countries allow EU deposit holders to opt for either interest earnings to be reported back to their home countries, or to have a withholding tax imposed on interest earned. A withholding tax rate of 15% was introduced in July 2005, in force until July 2008 when the rate increased to 20%. From July 2011, a 35% rate is to be ongoing.

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