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Lowtax
Network Content Update | Issue XXX | 03 April 2008 |
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Dear Colleague, This week:
I hope you find this update useful. Please remember that you can customise your mailing preferences by visiting your own profile page to choose from 29 offshore tax and law subjects in order to receive just the information you want. You can also unsubscribe completely by following the instructions at the bottom of this page. Kind regards, |
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Offshore
Jersey Not In EU Fiscal Area The island of Jersey, one of the Channel Islands between England and France, is a British Crown dependency although in practice is it self governing. Britain is responsible for its external affairs including negotiations with the European Union; under the UK's accession treaty with the EU, Jersey forms part of the single market but is outside the EU fiscal area. Jersey does not generally enter double-tax agreements, but has treaties with the UK and Guernsey, and a limited treaty with France. Economy Buoyant But Jersey Is Full Up! Jersey has a buoyant economy dominated by the finance sector. Unemployment is very low. The political stability in Jersey together with its consistently low tax status and its international reputation as an important financial centre make it an attractive prospect to foreign investors and workers. To protect the island's limited resources the government tends to discourage labour-intensive inward investment that is controlled by non residents. There are no investment grants or incentives, but electronics and other knowledge-based industries have been encouraged. Jersey's Lowtax Specialisations Jersey has particularly strong banking, investment fund and trusts sectors, with very well-developed advisory and financial infrastructure. The Jersey Financial Services Commission's quarterly report for the period to 30th September 2007 shows that almost 50 banks held deposits of GBP219.5 billion. The Net Asset Value of funds under administration has reached record levels of GBP221 billion and has, for the first time, overtaken the level of bank deposits held. There are a number of low-tax business formats, including International Business Companies, 'Exempt' companies, and Limited Partnerships. However in accordance with the Island’s commitment to the European Council of Finance Ministers (Ecofin), Jersey has pledged to ensure that no new International Business Companies are capable of being formed from 1st January, 2006. Jersey v. the EU and the OECD? Jersey's unique situation with regard to the EU is both a strength and a weakness. The island will remain a favoured base for holding and trading companies working into the EU, and for e-commerce activity; but it has the EU and the OECD to contend with. After several years of 'hands-off' policy in regard to Jersey taxation, the UK government in 2002 threatened Jersey with sanctions if it didn't fall in line with EU information-sharing rules. Jersey signed a 'commitment' letter to the OECD in February 2002, but it contained an 'Isle of Man' level playing field clause making changes dependent on comparable changes in Switzerland and the USA. By mid-2003, however, the OECD seemed to have forgiven Jersey, and was assisting it to design a '0/10' corporate tax system. In May, 2002, it became clear that Jersey, along with its fellow UK dependent territories Guernsey and the Isle of Man, was ready to sign up to the EU information-sharing regime. After the EU finally reached its compromise agreement on the Savings Tax Directive in early 2003, Jersey decided, along with Guernsey and the Isle of Man, to apply a withholding tax to the returns on personal savings for EU residents. The Directive came into force on July 1, 2005. Learn more in our full Jersey Knowledgebase. |
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Offshore
Madeira is well located off the EU and Africa Madeira is a small group of islands 1,000 km from Portugal and the African coast; 314 sq km accommodates around 240,800 people (February 2006) and many more tourists in season due to good scenery and a sub-tropical climate. The capital Funchal has an international airport well connected to European cities. The time zone is GMT. Madeira is part of Portugal and the EU; the language is Portuguese, although some English is spoken. The legal system is based on the civil code. The Madeiran Government has a good degree of autonomy from Portugal, but most legislation is Portuguese, including tax legislation. The economy is based on tourism, fishing, farming and financial services. As a peripheral and poorer region of the EU, there is considerable EU funding to support development, which can assist inward investment. The currency is the Euro. Portuguese taxes are on the high side, given its rather low level of economic achievement, but the Portuguese Government, with the agreement of the EU, created an International Business Centre on Madeira which until 2001 offered offshore status and very low taxes to manufacturing, service and financial companies, as well as a shipping registry. In late 2002, the EU approved an extension of the scheme, but this excludes new financial services companies. The Free Trade Zone in the International Business Centre has been quite successful, unlike some such ventures. VAT applies in Madeira, although at a lower than normal rate, and this can be a positive advantage for some importers into the EU. Portugal has been careful and clever in developing Madeira's offshore economy. Given that the EU has approved every stage of the process, Madeira's tax advantages have faced little threat from the 'harmful tax practices' initiative. Portugal has 46 double tax treaties, and these can be used alongside the International Business Centre to obtain a very low tax burden for many types of trading and commercial activity. In addition, Madeira is covered by the full array of EU legislation against money-laundering, and is not known to be a target of criminal activity. There were some concerns about the support of the Portuguese government for the MIBC during 2001, but the government elected in 2002 was dependent on Madeiran MPs for its majority. Recently, however, there have been renewed concerns in Madeira about Portuguese attitudes. Learn more in our full Madeira Knowledgebase. |
