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Jersey: Double Tax Treaties

Tax Treaties

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 (which are in any case being phased out) are not entitled to the benefits of the UK double tax treaty.

In December 2009, the Jersey authorities released guidance for Jersey residents with UK pensions following the entry into force on November 27, 2009, of a bilateral Tax Information Exchange Agreement (TIEA) signed by the two governments in March 2009.

Alongside the signing of the TIEA, the two authorities agreed to amend the 1952 Arrangement between Jersey and the United Kingdom for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income.

This incorporates a major change to the tax treatment of pensions, which means that Jersey residents will no longer be taxed by the UK tax authorities on certain pensions that they receive from the United Kingdom.

The Island's Comptroller of Income Tax, Malcolm Campbell, commented that:

“Following the enactment in the UK of the Double Taxation Relief on International Tax Enforcement (Jersey) Order 2009, Jersey residents in receipt of a UK pension may apply to the UK Tax Authority, HM Revenue and Customs (HMRC), to have, with effect from the April 6, 2010, their UK pension paid to them without the deduction of UK tax”.

“This arrangement could mean significant savings in terms of tax paid for some Jersey residents, who could have been paying 40% tax to HMRC on their pension and who may in future be subject to tax at 50%. The arrangement means that, subject to a claim being made and accepted by HMRC, Jersey residents will only be paying tax in Jersey, at a maximum rate of 20%, on their UK pension.”

The arrangement also affects residents of the United Kingdom who have been paying Jersey tax on their Jersey pensions.

Under the new regime, UK residents are able to apply to the Comptroller to stop Jersey tax being deducted from their Jersey pensions, meaning that they will only pay tax in the United Kingdom.

Latest Jersey Treaty Updates

Treaty Update: Jersey - Mauritius
09 March, 2017
Jersey and Mauritius signed a DTA on March 3.
Treaty Update: Jersey - Cyprus
25 July, 2016
The Jersey Government on July 11, 2016, announced the signing of a DTA with Cyprus.
Treaty Update: Germany - Jersey
04 November, 2015
Germany's upper house of Parliament approved a DTA with Jersey on October 16, 2015.
Treaty Update: Jersey - Rwanda
02 October, 2015
Jersey ratified its DTA with Rwanda on September 22, 2015.
Treaty Update: Jersey - Korea, South
21 August, 2015
Legislation was tabled before Jersey's parliament on August 12, 2015, to ratify the DTA with South Korea.
Treaty Update: Jersey - Various
21 August, 2015
Legislation was tabled before Jersey's parliament on August 11, 2015, that would ratify the territory's DTAs with Rwanda and Seychelles.
Treaty Update: Jersey - Korea, South
31 July, 2015
Jersey and South Korea signed a TIEA on July 21, 2015.
Treaty Update: Jersey - Rwanda
08 July, 2015
Jersey and Rwanda signed a DTA on June 26, 2015.
Treaty Update: Germany - Jersey
04 June, 2015
Germany and Jersey signed a DTA on May 7, 2015.
Treaty Update: Jersey - Italy
30 January, 2015
The TIEA between Jersey and Italy entered into force on January 26, 2015.
Treaty Update: Jersey - Hungary
29 January, 2015
The TIEA between Jersey and Hungary will enter into force on February 13, 2015.
Treaty Update: Jersey - Romania
05 December, 2014
Jersey signed a TIEA with Romania on December 1, 2014.
Treaty Update: Jersey - Latvia
02 April, 2014
The tax information exchange agreement between Jersey and Latvia entered into force on March 1, 2014, according to an update from the Jersey Government on March 13, 2014.
Treaty Update: Jersey - Belgium
17 March, 2014
Jersey and Belgium signed a TIEA on March 13, 2014.
Treaty Update: Jersey - Slovenia
11 February, 2014
Jersey ratified the TIEA the nation signed with Slovenia on February 4, 2014.
Treaty Update: Hungary - Jersey
31 January, 2014
Hungary and Jersey signed a TIEA on January 28, 2014.
Treaty Update: Jersey - Slovenia
27 December, 2013
A law to ratify the TIEA signed between Jersey and Slovenia was tabled before Jersey's parliament for its approval on December 23, 2013.
Treaty Update: Jersey - Slovenia
09 December, 2013
Jersey and Slovenia signed a TIEA on November 28, 2013.
Treaty Update: Italy - Jersey
20 November, 2013
According to preliminary media reports, Italy on November 11, 2013, endorsed a law that would ratify the tax information exchange agreement signed with Jersey.
Treaty Update: Jersey - Various
23 October, 2013
Authorities in Jersey are engaged in DTA negotiations or have agreed a draft double tax agreement with Bahrain, Cyprus, Mauritius, Saudi Arabia, the Seychelles and the United Arab Emirates, according to an update from the Jersey government published on October 16, 2013.
Treaty Update: Jersey - Switzerland
19 September, 2013
Jersey signed a TIEA with Switzerland on September 16, 2013.
Treaty Update: Jersey - Japan
05 August, 2013
The TIEA signed between Jersey and Japan will enter into force on August 30, 2013, following an exchange of diplomatic notes completing both nations' domestic ratification procedures on July 31, 2013.
Treaty Update: Jersey - Isle of Man
22 July, 2013
The DTA signed between Jersey and the Isle of Man entered into force on July 10, 2013.
Treaty Update: Jersey - Luxembourg
22 July, 2013
The Government of Jersey has completed its domestic ratification procedures in respect of the DTA the territory signed with Luxembourg, approving a law tabled before Jersey's parliament on July 2, 2013.
Treaty Update: Guernsey - Jersey
16 July, 2013
The comprehensive DTA signed between Guernsey and Jersey became effective on July 9, 2013.
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