The European Union's proposed Savings Tax Directive seems to have Jersey and the Isle Of Man at odds with which route to take. Under the proposed directive, offshore jurisdictions can either supply information about savings and investments to the investor's country of residence or levy a withholding tax and not disclose any information.
Guernsey, along with Austria and Luxembourg has already chosen the withholding tax route on interest for European Union residents. Jersey had previously mentioned that their preferred route at the time was to disclose information. However, rumour has it that Jersey is now thinking again after Guernsey's decision. The Isle Of Man is still undecided.
There are other problems with the implementation of the directive because Italy has issues concerning concessions over milk production quotas.
Our View
The implementation of either a withholding tax or exchange of information will definitely sway investors, depending on the reasons for investing offshore.
For jurisdictions that impose a withholding tax, investors records will still remain in that country and not be disclosed to the investors country of residence. This will obviously be beneficial to some. The downside is that some elements of financial crime may go undetected.
For jurisdictions that exchange information, there will be no withholding tax but all of the savings or investments will be disclosed. For people that intend to retire abroad and start to build up funds offshore, this could be the better route. With nothing to hide and no chance of potential future UK taxes, investors will have nothing to lose.