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Guernsey: Double Tax Treaties

Introduction

As a matter of policy Guernsey did not normally enter tax treaties. However, a double taxation treaty conforming to the OECD standard was signed with Malta on March 12, 2012. It came into force on March 10, 2013. Since the signing of the Malta DTA, Guernsey has signed a further seven agreements and those with the Isle of Man, Jersey and Qatar are in force. Those signed with Hong Kong, Lithuania, Luxembourg and Singapore are awaiting ratification. All of the aforementioned conform to the OECD standard model treaty. The double taxation with the United Kingdom does not conform to the OECD standard model treaty. Its main features are as follows:

  1. 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;
  2. Profits of shipping or air transport attributable to a resident of either country are not taxed in the other country, regardless of 1;
  3. 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);
  4. 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.

The agreement specifically excludes dividends and debenture interest from its provisions. Exempt and International Companies (abolished since January 1, 2008) are not entitled to the benefits of the UK double tax treaty.

Guernsey has also signed a Tax and Information Agreement (TIEA) with the UK, and has agreed to amend the provisions of the 1952 arrangement to add provisions on the taxation of income from pensions and a mutual agreement procedure.

Guernsey, along with its fellow UK dependent territories Jersey and the Isle of Man, is party to the EU's Savings Tax Directive, which went into force in July 2005. Under the agreement with the EU, Guernsey applies a withholding tax (initially 15%) on savings income paid to the citizens of EU member states. The withholding tax increased to 20% from July 1, 2008 for a period of three years, after which it rose to 35%.

In July 2009, the Guernsey government released a statement regarding the Isle of Man’s decision to switch from a withholding tax system to the automatic exchange of information from July 1, 2011, when the withholding tax option currently available to customers having accounts with Isle of Man banks as part of a transitional arrangement was to be withdrawn.

The Guernsey government underlined that it had always considered the withholding tax arrangement to be transitional, and began a consultation with industry about a review of the position in the island.

Mike Brown, Chief Executive of the States of Guernsey commented at the time that:

"The international climate is changing with regards to exchange of information. We are fully aware of those developments and have had the position under review for some time.

"Guernsey’s commitment to the highest international standards in transparency is constant."

The move to automatic exchange of information was passed by the States of Deliberation on November 24, 2010, and paying agents had to implement the change between January 1, 2011, and June 30, 2011.

Latest Guernsey Treaty Updates

Treaty Update: Guernsey - United Kingdom
16 January, 2017
A Protocol to Guernsey and the UK's DTA entered into force on December 6, 2016, the UK Government confirmed on January 4.
Treaty Update: Guernsey - Seychelles
25 October, 2016
Guernsey's DTA with the Seychelles became effective on October 6.
Treaty Update: Guernsey - Chile
19 September, 2016
According to a September 2 update from the Guernsey Government, the territory's TIEA with Guernsey entered into force on August 2.
Treaty Update: Guernsey - Chile
11 August, 2016
The TIEA between Guernsey and Chile entered into force on August 2, 2016.
Treaty Update: Guernsey - Spain
02 December, 2015
Guernsey and Spain signed a TIEA on November 17, 2015.
Treaty Update: Guernsey - Cayman Islands
23 October, 2015
Guernsey and the Cayman Islands completed the signing of a Protocol to their tax information exchange agreement on October 8, 2015.
Treaty Update: Guernsey - Korea, South
07 October, 2015
Guernsey and South Korea signed a TIEA on September 23, 2015.
Treaty Update: Guernsey - British Virgin Islands
17 September, 2015
A Protocol to the TIEA between Guernsey and the British Virgin Islands entered into force on September 3, 2015.
Treaty Update: Gibraltar - Guernsey
29 June, 2015
Gibraltar on June 4, 2015, ratified the TIEA signed with Guernsey, publishing a notification in its Official Gazette.
Treaty Update: Guernsey - Monaco
04 June, 2015
Guernsey's DTA with Monaco entered into force on May 9, 2015.
Treaty Update: Guernsey - Gibraltar
07 May, 2015
Guernsey and Gibraltar completed the signing of a Protocol to their TIEA on April 6, 2015.
Treaty Update: Guernsey - Monaco
06 May, 2015
Guernsey's DTA with Monaco will enter into force on May 9, 2015.
Treaty Update: Guernsey - Monaco
22 April, 2015
The DTA signed between Guernsey and Monaco will enter into force on May 9, 2015.
Treaty Update: Seychelles - Guernsey
16 April, 2015
The Seychelles has adopted legislation ratifying the DTA signed with Guernsey.
Treaty Update: Italy - Guernsey
13 March, 2015
The TIEA between Guernsey and Italy entered into force on March 5, 2015, following the completion of Italy's domestic ratification procedures.
Treaty Update: Guernsey - Swaziland
09 March, 2015
The TIEA between Guernsey and Swaziland entered into force on March 12, 2015.
Treaty Update: Guernsey - Slovakia
23 January, 2015
The TIEA signed between Guernsey and Slovakia will come into force on January 26, 2015.
Treaty Update: British Virgin Islands - Guernsey
06 January, 2015
The TIEA between the British Virgin Islands and Guernsey entered into force on November 11, 2014.
Treaty Update: Guernsey - Austria
05 December, 2014
The TIEA signed between Guernsey and Austria entered into force on November 16, 2014.
Treaty Update: Guernsey - Switzerland
28 October, 2014
The TIEA signed between Guernsey and Switzerland entered into force on October 14, 2014.
Treaty Update: Guernsey - Luxembourg
15 October, 2014
The DTA between Guernsey and Luxembourg entered into force on August 8, 2014.
Treaty Update: Guernsey - Ghana
06 August, 2014
Guernsey expects to conclude negotiations towards a TIEA with Ghana in 2014, according to a July 30, 2014, update from the Guernsey Government.
Treaty Update: Cyprus - Guernsey
01 August, 2014
The signing of a DTA between Cyprus and Guernsey was completed on July 29, 2014.
Treaty Update: Austria - Guernsey
30 July, 2014
According to preliminary media reports, Austria's parliament on July 8, 2014, approved the tax information exchange agreement signed with Guernsey.
Treaty Update: Guernsey - Uruguay
09 July, 2014
Guernsey signed a tax information exchange agreement with Uruguay on July 2, 2014.
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