UK signs new Double Tax Treaties with Jersey, Guernsey and the Isle of Man
The UK has recently signed new double taxation agreements with Jersey, Guernsey and the Isle of Man providing some largely welcomed updates to reflect changes in international taxation and replacing the existing treaties which dated back to 1950s.
The double tax treaties are agreements between governments which set out how personal and corporate income and gains are taxed with an aim to prevent a person or business being taxed twice without containing any loopholes which allow for tax avoidance. The introduction of the new treaties hopes to improve international cooperation in relation to tax matters.
The new treaties contain some key updates including provisions on anti-abuse, royalties, dividends and interest. The new treaty between the UK and Guernsey also provides for the exchange of information between their governments. Perhaps the most essential amendment on a practical level is the change to how residence is determined for the purpose of taxation. Each jurisdiction’s tax authorities must now determine residence by a mutually agreed procedure rather than determining residence by the place a business is managed and controlled, or where a person resides, which is how it is currently assessed.
The treaties are currently going through each jurisdiction’s parliamentary procedure and are expected to come into force early 2019.
For cross boarder tax advice please contact Graeme Perry, Head of UK and Cross Border Tax.