Update on Tax Haven Information Exchange
Originally sent: July 25, 2005A few months ago I sent out a newsletter reminding financial advisers that arrangements were in hand for the exchange of information between the UK tax authorities and the tax authorities of a number of major tax havens.
Just in case you have not been following this issue, I should advise you that the Directive implementing this exchange of information went live on 1st July. Switzerland, Liechtenstein, Andorra, Monaco, San Marino, Jersey, Guernsey and the Isle of Man as well as the Caribbean overseas territories of the UK and the Netherlands have all entered into similar agreements even though they are not European Union members and not subject to European Directives.
Clients who have income sources in these countries will soon find a withholding tax is being deducted unless they agree to a disclosure to Revenue & Customs. The tax will start at quite a low level, but is eventually due to rise to 35%.
One glaring exception is Gibraltar. The position taken by Gibraltar is that the Directive does not apply to savings of UK residents in their country, as it refers to payments made in one Member State to residents of another Member State ? and Gibraltar and the UK are not separate Member States. Do not expect this exception to remain for very long, however. Our tax authorities are working closely with the Gibraltar tax authorities to produce legislation that will probably close this gap in the Savings Tax Directive within the next few months.
Trying to avoid tax by moving your income offshore is normally, of course, illegal. And there are plenty of legal ways to reduce your tax bill, so why take the risk?
Adviser Breakthrough Training Solutions Ltd. takes no responsibility for loss occasioned by any person acting or refraining from action, or in consequence of any other person acting or refraining from action, as a result of the material in this article.
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