The Government of Jersey signed a new Double Tax Agreement (“DTA or Agreement”) with the UK on 2 July 2018. The new DTA will replace the 1952 Agreement (“the old Agreement”) the island currently has with the UK. As the new DTA is based on the OECD model tax treaty, investors and their advisors should be familiar with the layout and find it much clearer than the old Agreement.
The DTA provides for the elimination of double taxation (without creating opportunities for non-taxation) in a number of areas, covering both corporate and personal income including business profits, dividends, interest, royalties, income from employment and pensions. In addition to this, the Agreement will provide for the exchange of information on request, building on the existing Tax Information Exchange Agreement with the UK. The DTA also reinforces Jersey’s commitment to providing assistance to the UK in relation to exchange of information where necessary for the prevention of tax evasion.
Jersey is fully committed to the OECD’s Base Erosion and Profit Shifting (BEPS) program, including signing the Multilateral Instrument (MLI) in June 2017 which is seen as a key element in implementing the OECD’s anti-tax avoidance agenda. As such, the new Jersey-UK treaty is consistent with the direction of travel in relation to the BEPS agenda.
It should be noted that the new Agreement is not yet in force. The exchange of letters, the DTA and an accompanying Protocol will be presented to the States Assembly for ratification. In concert with the UK it is expected that the new DTA will come into force at the beginning of 2019.
We have provided below some high level commentary on some of the key articles in the new DTA.
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