Jersey Reports EU Savings Tax Revenues

by Jason Gorringe, Tax-News.com, London

15 June 2006

Jersey's Comptroller of Income Tax has reported that GBP13 million has been collected in withholding tax revenues from bank deposits in the first six months of the European Savings Tax Directive.

Under the terms of the agreements with individual EU member states, which went into effect on July 1, 2005, 25% of the amount collected is retained by the collecting authority. Accordingly the EU Member States will receive some GBP10 million and the Jersey Exchequer will receive some GBP3 million.

According to the Jersey government, this is in line with the initial estimates.

Individuals who reside in an EU Member State with relevant savings income arising in Jersey can opt for information on the savings income received to be exchanged with their domestic tax authority rather than be liable to the retention tax. It is estimated that approximately 30% have chosen this option, but the Jersey authorities expect this pecentage to increase with time. (The retention tax will eventually increase to 35% under the terms of agreements).

A statement by the States of Jersey revealed that both the Comptroller of Income Tax and the President of the Jersey Bankers’ Association are satisfied that the process of exchanging information and the retention of tax has worked smoothly.

"Both information and tax have been transferred efficiently to the Income Tax Department for onward transmission to the relevant competent authorities in the EU Member States before the 30 June 2006 as required under the Agreements," the statement explained.

Commenting, Senator Walker, Chief Minister, noted that: “This first payment of retention tax to the EU Member States is ample evidence, if it is needed, of the good neighbour policy we follow in our relations with the EU, a policy that we expect to see reciprocated.”

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