UBS Recommends Withholding Tax Option For Jersey

by Jason Gorringe, Tax-News.com, London

03 April 2003

Representatives from the Swiss bank UBS have advised the Jersey authorities to choose the withholding tax option over exchange of information when the time comes to implement the European Savings Tax Directive regulations, according to the Jersey Evening Post.

Hans-Peter Bauer, managing director of UBS in Basel, made the recommendation at a joint UBS/Jersey Bankers Association (JBA) lunch last Friday. He said the path that the Swiss had chosen offered the best solution as it gave account holders the ultimate choice as to what option to take.

Switzerland, alongside Austria, Belgium and Luxembourg has argued for the right to levy the withholding tax. However, the jurisdiction has decided to give banking clients the right to choose information exchange as an alternative.

Hans Barlocher, president of the JBA and managing director of UBS in Jersey, agreed with his Swiss counterpart, explaining that the withholding tax offered the more flexible solution. It would be also be a much fairer system for Jersey said Barlocher, and would likely be less costly in terms of lost business.

The bankers' views on the issue run counter to the Jersey authority's preference for automatic exchange of information, although Barlocher stressed the jurisdiction has yet to officially make a decision. The UK is known to favour exchange of information, fearing further lost business for the City of London's financial sector.

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