Guernsey Mulls Savings Tax Options

by Amanda Banks, Tax-News.com, London

27 January 2003

Speaking to the Guernsey Press and Star last week, various prominent figures from within Guernsey's finance industry expressed uncertainty as to which of the paths open to it with regard to the EU's savings tax agreement the jurisdiction will take.

Following last Tuesday's Ecofin meeting of European Union Finance Ministers, it was announced that while 12 of the 15 current EU member states would be adopting automatic information exchange in 2004, Austria, Belgium and Luxembourg will be permitted to levy a withholding tax, until such times as non-members such as Switzerland and the United States agree to exchange information on the taxation of non-resident savings interest.

According to a Council of Europe document published after the agreement was announced: ''All relevant [UK] dependent or associated territories (the Channel Islands, Isle of Man and Caribbean territories) must either apply automatic exchange of information or adopt the transition withholding tax arrangements applicable to Austria, Belgium, Luxembourg, and Switzerland.'

However, in Guernsey last week, no-one was giving anything much away:

'We will have to consider what is in the statement made on Tuesday and we will be meeting our Jersey friends soon to discuss our common interests,' Advisory and Finance Committee president, Laurie Morgan told the Guernsey Press.

Meanwhile, Guernsey Promotional Agency chief executive, John Bridle was similarly tight-lipped, observing only that:

'It is important for our international customers within the EU that it is not a question of automatic exchange of information without consideration of the alternative. The crux of the matter is that we now have a decision to make as to what maintains our position against the competition and how we action that.'

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