Guernsey Joins The Information Exchange Bandwaggon

by Ulrika Lomas, Tax-News.com, Brussels

05 June 2002

The EU's Ecofin (Finance Ministers) meeting in Luxembourg yesterday heard that Guernsey has followed its Channel Islands partner Jersey in agreeing to introduce an information exchange regime as part of the overall EU scheme for countries to report interest payments to EU citizens home tax authorities.

UK Chancellor Gordon Brown told the Ecofin council in Luxembourg that the agreement of both Channel Islands to comply with new EU rules marked "significant progress".

Frits Bolkestein, EU taxation commissioner, welcomed the news, but he had to admit that talks with Switzerland on a similar information deal were proving "very difficult" and that agreement now looked impossible before the EU's June 30 deadline.

The EU's information-sharing plan was a substitute for the introduction of a withholding tax, which proved impossible to agree, but under the deal struck at Feira in 2000 it is dependent on the agreement of Switzerland, the US and key offshore financial centres to operate a similar plan.

The adherence of Jersey and Guernsey to the plan is of course dependent on a successful conclusion of negotiations with Switzerland and the US, neither of which seems very likely before the end of 2002, which was the date set for final agreement on the savings tax Directive. No one knows what will happen if agreement is not reached in time.

In a positive development for Luxembourg, which has introduced legislation covering international pension funds, France yesterday gave the green light to new laws to allow pension funds to operate across Europe, removing the biggest remaining obstacle to the long-awaited reforms.

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