Tax Information Exchange Agreements ("TIEAs") are agreements which allow governments to exchange information relevant to their domestic tax laws.
Entering into TIEAs evidences the mutual respect between jurisdictions relating to tax matters and demonstrates willingness to comply with international standards of financial regulation, anti-money laundering and combating the financing of terrorism.
Jersey has concluded 16 TIEAs to-date with Australia, Denmark, Faroe Isles, Finland, France, Germany, Greenland, Iceland, Ireland, Netherlands, New Zealand, Norway, Portugal, Sweden, United Kingdom and the United States of America. The Taxation (Exchange of Information with Third Countries) (Jersey) Regulations 2008 (the "2008 Regulations") set out how each TIEA will operate.
Scope of TIEAs
The scope of each TIEA is identical although individual types of taxes covered may vary in each TIEA. They all state that the parties will provide assistance through exchange of information that is foreseeably relevant:
- to the administration or enforcement of the domestic laws of the parties concerning the taxes covered by the TIEA;
- to the determination, assessment, enforcement or collection of tax or to the investigation of tax matters or prosecution of criminal tax matters.
But, there is no obligation to provide information which is neither:
- held by the authority requested to provide such information; nor
- in the possession of the said authority; nor
- obtainable by persons who are within the said authority's territorial jurisdiction.
Information is wide ranging and is defined in each TIEA as meaning "any fact, statement, document or record in whatever form". Each party to a TIEA must ensure that it has the authority (subject to the terms of Articles 1 and 2 of each TIEA) to obtain and provide, through its competent authority and upon request, (i) information held by banks, other financial institutions and any person, including nominees and trustees, acting in an agency or fiduciary capacity; and (ii) information regarding the ownership of companies, partnerships, collective investment schemes, trusts, foundations and other persons, including information on all persons in an ownership chain, and in the case of:
- collective investment schemes: information on shares, units and other interests;
- trusts: information on settlors, trustees, protectors and beneficiaries; and
- foundations: information on founders, members of the foundation council and beneficiaries.
Where the request for information relates to a civil tax matter, the request can only be made for matters arising on or after the date of execution of the TIEA. In contrast, requests for information concerning criminal tax matters can be made for any period prior to or after the execution of the TIEA.
Jersey's competent authority
In Jersey, the competent authority is the Comptroller of Taxes (the "Comptroller").
Pursuant to regulation 2 of the 2008 Regulations, the Comptroller may require a taxpayer to provide:
- a document or record in the taxpayer's possession that contains, or in the reasonable opinion of the Comptroller may contain, tax information that is relevant to a liability to tax to which the person is subject or may be subject, or to the amount of any such liability;
- tax information within the taxpayer's knowledge or belief that the Comptroller reasonably requires as being relevant to any such liability, or to the amount of such liability; and
- evidence within the taxpayer's possession that the Comptroller reasonably requires as being relevant to the taxpayer's residential status for the purposes of the 2008 Regulations.
The Comptroller must give notice in writing to the taxpayer ("Taxpayer's Notice") of such request unless:
- a document or record;
- tax information; or
relates to the conduct of a pending appeal by the taxpayer in respect of tax.
Pursuant to regulation 3 of the 2008 Regulations, where the Comptroller has reasonable grounds for believing:
- that a taxpayer may have failed to comply, or may fail to comply, with a domestic law of a third country concerning tax; and
- that any such failure has led, is likely to have led or is likely to lead, to serious prejudice to the proper assessment or collection of tax,
the Comptroller may also require information about a taxpayer to be provided by 'other persons'. Such other persons may be required, by means of a notice in writing ("Other Persons Notice"), to provide to the Comptroller a document or record in their possession that contains or, in the reasonable opinion of the Comptroller may contain, tax information that is relevant to:
- a liability to tax to which the taxpayer is subject or may be subject;
- the amount of any such liability; or
- the taxpayer's residential status for the purposes of the 2008 Regulations.
Where requests are made by the Comptroller to a person other than the taxpayer, the Comptroller must give the taxpayer:
- a copy of the Other Persons Notice; and
- a written summary of the Comptroller's reasons for issuing the Other Persons Notice
- their disclosure would identify, or might identify, a person who has provided information that the Comptroller takes into account in deciding whether to issue the Other Persons Notice;
- the Comptroller is satisfied that there are reasonable grounds for suspecting that the taxpayer has committed a relevant criminal offence; or
- the Comptroller is satisfied that disclosure of information of that description would prejudice the assessment or collection of tax.
A person may comply with a Taxpayer's Notice or an Other Persons Notice by providing a copy of the original document or record requested in such notice. However, the Comptroller may (by notice in writing) require the recipient of any such notice subsequently to make the original document or record available for inspection (regulation 3(8) of the 2008 Regulations). In such a situation, the relevant document or record must be provided within the time period specified in the notice (which cannot be less than 30 days beginning on the date on which the notice is given to the person who is to comply with it (regulation 4 of the 2008 Regulations)).
If a Taxpayer's Notice or an Other Persons Notice is served and not complied with, the Royal Court may make an order that the taxpayer, or the other person, provide to the Comptroller the information requested in the Taxpayer's Notice or in the Other Persons Notice pursuant to regulations 7 and 8 of the 2008 Regulations. In such circumstances, a person is entitled:
- to at least 14 days' notice of the Comptroller's intention to apply for such an order; and
- to appear and be heard at the hearing of the application.
Taxes covered by the TIEAs
The various taxes covered under each of the TIEAs that Jersey has entered into are outlined in the Schedule below.
Requests for information
Each TIEA sets out guidelines as to what a request should contain and emphasis is placed upon the "greatest detail" being provided by the requesting party in relation to its request.
Each request must be in writing and must specify the following:
- the identity of the person under examination or investigation;
- the period for which the information is requested;
- the nature of the information requested and the form in which the requesting party would prefer to receive it;
- the tax purpose for which the information is sought;
- the reasons for believing that the information requested is foreseeably relevant to the tax administration and enforcement of the requesting party, with respect to the person identified in the first bullet point of this list;
- grounds for believing that the information requested is present in the requested party or is in the possession of or obtainable by a person within the jurisdiction of the requested party;
- to the extent known, the name and address of any person believed to be in possession of or able to obtain the information requested;
- a statement that the request conforms with the laws and administrative practice of the requesting party, that if the requested information was within the jurisdiction of the requesting party then the competent authority of the requesting party would be able to obtain the information under the laws of the requesting party or in the normal course of administrative practice and that the request is in conformity with the TIEA; and
- a statement that the requesting party has pursued all means available in its own territory to obtain the information, except where that would give rise to disproportionate difficulty.
Any request made by a party to a TIEA must contain the detail outlined above. If a request is not compliant with the above, the requested party may decline to assist.
As at 17 June 2010, Jersey has received requests for information from:
- the USA;
- the Netherlands;
- Sweden; and
"Fishing expeditions" are not permitted. This rule is directed at situations where a foreign authority does not have any idea whether the Comptroller has anything to say or provide, and cannot provide the Comptroller with any reasonable basis for believing that the person subject to any tax investigation will have any useful information. If a request constitutes a fishing expedition, the Comptroller may decline to provide the information requested.
When Jersey may decline to assist
In addition to requests that constitute "fishing" (as outlined above), a request may be declined where:
- it is not made in conformity with the relevant TIEA;
- the foreign authority has not pursued all means available in its territory to obtain the information, except where recourse to such means would give rise to disproportionate difficulty; or
- the disclosure of the information requested would be contrary to public policy.
Legal professional privilege - does it apply in the case of requests made pursuant to TIEAs?
TIEAs do not impose on a taxpayer or third party any obligation to provide information subject to legal professional privilege.
Double taxation agreements
Jersey is entering into Relief from Double Taxation Agreements ("DTAs") and establishing Mutual Agreement Procedures in order to ensure that the TIEAs Jersey has entered into do not hinder the free movement of individuals and trade between Jersey and the other countries party to those TIEAs. The first DTA, based on the OECD model convention, is with Malta. As at 17 June 2010, a DTA had been agreed with Estonia and negotiations were well advanced in respect of a DTA with Belguim. Please see www.gov.je for more information on DTAs.
Can Jersey terminate the TIEAs it has entered into?
A TIEA can be terminated by either party to the agreement serving a notice of termination by letter to the competent authority of the other party. The notice will be effective from the first day of the month following the expiration of a period of three months after the date of receipt of such notice by the other party. Any request received up to the effective date of termination will be dealt with in accordance with the terms of each TIEA.
As at 15 July 2010, Jersey had initialled TIEAs with the following countries:
- People's Republic of China; and
- South Africa.
These TIEAs will be signed by ministers in due course.
Jersey has exchanged draft TIEAs with the following countries:
- Spain; and
Jersey has also invited the G20 countries that are not OECD members, and the remaining OECD member countries, to enter into TIEA negotiations.
This schedule outlines the taxes covered under each of the 16 TIEAs that Jersey has entered into.
It is important to note the caveat that appears in every TIEA which states that the TIEA will cover any identical or substantially similar taxes imposed by either party after the TIEA has been executed with the consent of the other party.