Jersey International agreements

As a matter of policy Jersey does not normally enter tax treaties. However, double taxation agreements exist with the United Kingdom and Guernsey, and a limited agreement with France exempting a resident of either country from tax in the other country on profits from shipping and air transport.

The UK and Guernsey treaties do not conform to the OECD standard model treaty. Their main features are as follows:

the profits derived from an industrial or commercial enterprise in one country will not be taxed in the other country except to the extent that they are attributable to a permanent establishment;
profits of shipping or air transport attributable to a resident of either country are not taxed in the other country, regardless of 1.
an individual resident in only one of the two countries is exempt from tax in the other country on personal, including professional services performed in the other country on behalf of a resident of his own country (but they must be taxed in his own country)
if despite the above, tax is payable in both countries, the tax paid in one country is allowed as a credit against tax due in the other. However as far as Jersey is concerned allowance for tax paid is only up to 20% of the taxable income in the other country, i.e the Jersey rate of tax is applied to, say, UK taxable income rather than the amount actually levied by the UK Inland Revenue. This means that there is effectively only a partial double taxation agreement between Jersey and the UK.

The agreement with the United Kingdom specifically excludes dividends and debenture interest from its provisions.

International Business Companies are not entitled to the benefits of the UK double tax treaty.

It became clear in May 2002 that Jersey, along with its fellow UK dependent territories Guernsey and the Isle of Man, would agree to be part of the EU's information-sharing regime, whereby financial institutions are obliged to pass details of income on investments by nationals of EU member states to their home tax administrations. The EU began information-sharing in 2005, and after some hesitation, Jersey decided to opt for a withholding tax on the Swiss model. This withholding tax became effective from July 1, 2005 at an initial rate of 15%. Jersey's Comptroller of Income Tax reported in mid-2006 that GBP13 million has been collected in withholding tax revenues from bank deposits in the first six months of the directive.

In November, 2002, Jersey signed a Memorandum of Understanding (MoU) with the Gulf state of Bahrain, designed to facilitate cooperation between the two countries on issues such as applications for licences from financial institutions, and the investigation of irregularities.

In October 2003, the Jersey Financial Services Commission announced that Jersey had signed a Memorandum of Understanding (MoU) with the International Organisation of Securities Commissions (IOSCO). The MoU is designed to combat securities and derivatives violations. It obliges signatories to share information about the illegal use of their securities and derivatives markets with each other. In signing up to the MoU, Jersey joins another 24 members. However, according to the JFSC, the island is one of the first offshore finance centres to join. "By signing this memorandum with IOSCO, Jersey reinforces its status as a leading international financial centre and gives international investors greater confidence in the island," JFSC compliance director, John Pallot explained.

In 2006, the JFSC signed Memoranda of Understanding with the regulators in Dubai, Qatar the Netherlands and the Cayman Islands. These agreements have formalised arrangements for cooperation and information sharing between the regulators and facilitated the enforcement of, and compliance with, the laws of their respective jurisdictions in a bid to help protect investors and depositors and to promote the integrity of financial services markets in the two jurisdictions.

The Jersey Financial Services Commission and the Cyprus Securities and Exchange Commission signed a memorandum of understanding in February 2007 that will further co-operation between the two regulatory bodies.

The JFSC signed a Memorandum of Understanding in April 2007 with two other authorities: the Office of the Superintendent of Financial Institutions Canada (OSFI) and the Irish Financial Services Regulatory Authority (IFSRA).

The JFSC and the British Virgin Islands Financial Services Commission have signed a memorandum of understanding in August 2007.This establishes a formal basis for co-operation, including the exchange of information and investigative assistance.