A brief recap for anyone who has
just joined us: the EU Savings Directive determines that offshore interest paid
on savings and investments will, for the first time, 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 will soon affect
you.
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.
Jersey, Isle of
Man,Gibraltar,Guernsey,inland revenue uk,inland revenue government
uk,withholding tax,inland revenue tax credit uk,eu savings tax directive
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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?
The Eu Savings Tax Directive is not
fully operational
The UK Inland Revenue has issued a
guidance note to the effect that the period, 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 as an alternative form of banking.
Is your
offshore bank charging you 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
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