For a number of years, EU resident individuals who have earned interest in Jersey have been able to choose whether to disclose details of the interest income to the Jersey tax authorities or to pay retention tax on the interest at 35%. However, this ability to choose has been removed so that paying agents must now disclose to the Jersey tax authorities interest payments made to EU resident individuals on or after 1 January 2015. Under bilateral agreements made with all European Union countries, the Jersey tax authorities will pass the information to the tax authority in the client's EU home state.
This move to automatic disclosure will be of interest to banks, registrars, custodians and other financial institutions that make interest payments, or distributions from certain collective investment schemes, to individuals in EU Member States. The change was implemented on 29 January 2014 when the Taxation (Agreements with European Union Member States) (Amendment No.2) (Jersey) Regulations 2014 came into effect. The Regulations amended the Taxation (Agreements with European Union Member States) (Jersey) Regulations 2005 to make the automatic exchange of information mandatory.
The deadline for disclosure every year is 31 March, for information relating to the previous calendar year. The first deadline for mandatory disclosure, to report interest payments made in 2015, will therefore be 31 March 2016.
The report must state:
- the name and address of the Jersey paying agent;
- the identity and residence of the beneficial owner;
- the account number of the beneficial owner or, where there is none, the identification of the debt claim giving rise to the interest payment; and
- the description and amount of the interest payment.
The regulations allow paying agents to implement automatic exchange of information ahead of 1 January 2015, if they so wish.
The change brings Jersey into line with Guernsey and the Isle of Man, which adopted automatic exchange of information regimes on 1 July 2011.
Paying agents may want to ensure that their terms and conditions highlight the fact that interest payments will be disclosed. To the extent that they have not done so already, banks and other businesses may wish to notify EU resident account holders ahead of the change.