EU Tax Savings Directive
Jersey, Isle of Man,
Gibraltar, Guernsey, inland revenue uk, inland revenue government uk,
withholding tax, inland revenue tax credit uk, eu savings tax directive,
banking offshore saving tax
A brief recap for anyone who has just joined us: the EU
Savings Directive determines that offshore interest paid on savings and
investments will now be taxed directly at source. Previously, offshore investors could benefit from what is known as 'gross roll-up' (Interest without being Taxed) but now, a 'withholding tax' of 15 percent will be levied on any savings in Banks and investments held offshore.
How does this affect me?
If you hold savings accounts in European banks in countries such as Spain, or in European offshore centres; such as the Isle of Man, Jersey, Guernsey and Gibraltar, the European Union's Savings Tax Directive
now be deducted.
This will result in an
initial withholding tax of 15% on the interest on your savings, to be
increased to 35% by 2011. Your account details may also be disclosed if
the tax authority in your country of residence believes you are
illegally avoiding tax. The countries choosing to apply a withholding
tax include the Isle of Man, Luxembourg, Jersey, Guernsey, Gibraltar,
and Spain. Switzerland is the fly in the ointment, as everyone predicted
it would be.
The European Union wants
complete disclosure across Europe and is applying enormous pressure on
countries with secrecy laws like Switzerland to achieve its goal. There
is little doubt that disclosure will become a reality for European
residents in the not too distant future. Savers with the Isle of Man and
Channel Islands institutions will be offered the choice of paying a
withholding tax or allowing their savings providers to disclose
information about them to their home tax authority.
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The directive was devised to curb tax evasion in EU member states and it only applies to citizens of EU states who are resident in EU member countries. Therefore it will apply to British expats, living in Spain.
When does this start to affect me?
Jersey, Isle of Man,
Gibraltar, Guernsey, inland revenue uk, inland revenue government uk,
withholding tax, inland revenue tax credit uk, eu savings tax directive, banking
offshore saving tax
The UK Inland Revenue has issued a guidance note to the effect that the tax will be withheld not only on bank deposits but on offshore investments, held in personal names, as well.
If you wish to avoid paying withholding tax or risk disclosure you can move your money into an offshore Personalised Portfolio Bond. (See our article on PPBs) The savings tax directive does not affect this type of investment and in some EU countries, including the UK, offers various additional tax benefits.
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We appreciate that not all monies should be invested into PPBs and therefore would recommend that you consider Switzerland
or a company account as an alternative form of banking.
Is your offshore bank about to charge 15% withholding Tax?
Are the currency exchange rates playing havoc with your income?
Would you like to be returning 8-10% Per Annum on your deposits?
Would you like to keep your assets away from the prying eyes of the revenue?
Would you like to protect your dependants from Inheritance Tax?
If you answer YES to all the above then you should be talking to Hamiltons.
Jersey, Isle of Man,
Gibraltar, Guernsey, inland revenue uk, inland revenue government uk,
withholding tax, inland revenue tax credit uk, eu savings tax directive,
banking offshore saving tax
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