Friday, July 22, 2005

Guernsey considers Euro Tax opt out

EU Directive on Taxation of Savings * Gib at centre of row

Guernsey is considering opting out of a new European Union tax directive unless the British Government closes a ‘loophole’ that means the law does not apply between Gibraltar and the UK.

Guernsey intends to press the UK government to force Gibraltar to toe the line at a meeting of Crown dependencies next week, the BBC reported.

The EU Directive on Taxation of Savings came into effect on July 1st and applies to savings income payments made in one Member State to someone resident in another Member State. But because the UK and Gibraltar are not separate member states of the EU, the directive does not apply between them.

“The UK and Gibraltar Governments are in discussion and working together with a view to agreeing arrangements to close this gap between them as soon as possible during the next few months, on terms that would offer a choice between exchange of information and withholding tax,” said the Chief Minister, Peter Caruana, and Dawn Primarolo, the UK Paymaster General, in a joint statement earlier this month.

But other jurisdictions including Guernsey want the ‘loophole’ plugged sooner because they say it gives Gibraltar an unfair advantage. Guernsey’s director of finance sector development, Peter Niven, told the BBC that suspending the directive would be a last resort.

“All the financial institutions on the island have put into place the Savings Tax Directive and to suspend it would create an awful lot of work,” he said.

“First of all we’ve been advising them we’re going into the directive, then we’re advising them we’re not going into the directive because of a glitch, and when we do go in we’d have to write to them again.

It’s a bit like the hokey cokey - one moment you’re in, the next moment you’re out.”


Related Article:

21 July 2005 - Gibraltar accused of taking advantage of loophole

04 July 2005 - Channel Island fury over Gibraltar tax ‘perk’

02 July 2005 - UK and Gibraltar Government seek deal on witholding tax

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