Jersey Germany Tax Pact

Jersey – Germany Tax Pact

Jersey and Germany have signed a bilateral tax information exchange agreement as pressure mounts on authorities to crack down on secrecy in offshore jurisdictions.  Early in July, Germany agreed to deduct 20 per cent retention tax from the interest payments made to residents unless they voluntarily disclose income information to the relevant fiscal authorities.  This is the third of such agreements made by Jersey, which already has arrangements with the US and the Netherlands.

The European savings tax directive reached its third birthday on 1 July and raised retention tax from 15 per cent to 20 per cent, bringing it level with the basic rate of UK income tax.  The retention tax rate is set to rise to 25 per cent from 1 July 2011.  Jersey authorities have reported £35m in retention tax for 2007.  Under the agreement, 75 per cent of the tax retained will be sent to the individual member states concerned and the remaining 25 per cent will be retained by the controller of income tax.

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