Guernsey To Exchange Tax Information

Guernsey's Chief Minister, Lyndon Trott, has announced a date for the introduction of an automatic exchange of information regime in the island, which will allow for the transmission of information relating to interest income earned by EU-resident individuals to their home authorities.

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

Drawing on the results of a consultation, carried out by the Fiscal and Economic Policy Group in this summer, Trott announced: “In light of the views expressed by members of industry and industry bodies, and given the States’ commitment to maintaining the highest standards of tax transparency, the Fiscal and Economic Policy Group recommended to Policy Council that institutions in Guernsey should move to automatic exchange of information from January 1, 2011, and no later than July 1, 2011. This ‘from but by’ transition period is to provide the maximum flexibility to our industry in making their necessary adjustments to their payment systems,” he explained.

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.

According to the Guernsey government, a report on the introduction of the automatic information exchange regime will be submitted to the States of Guernsey in the early autumn to confirm arrangements for the move.