Jersey and Guernsey remain off tax haven blacklist

Wednesday, 15 April 2009 11:20

France and Germany made their opposition to tax havens very clear at the G20 summit on 2 April. Agreement was reached that countries that refuse to pass information to foreign tax authorities to help catch potential evaders will face sanctions in future.

The governments of Jersey and Guernsey are not on the ‘blacklist’ as they already significantly conform to internationally agreed standards. Both of the Channel Islands have signed up to anti-money laundering conventions. They are also signatories to the European Savings Directive, which is geared to preventing tax evasion in the European Union.

Jersey, Guernsey and the Isle of Man have all signed Tax Information Exchange Agreements (TIEAs) with the UK, France, Germany, Ireland, and other countries within the European Union.

Commentators in both Jersey and Guernsey believe they will benefit from a cracking down on rival centres. Jersey aims to have a Foundations Law on the statute book by June, which will create continental-style versions of offshore trusts. Jersey claims its foundations will offer more transparency than those domiciled in many other jurisdictions, with Liechtenstein in particular being the subject of trenchant criticism.

Guernsey will follow suit with its own foundation law later this year.

Alan Binnington, private client director at Royal Bank of Canada Wealth Management, commented, “The main thrust of our private wealth business in the Channel Islands is the transfer of wealth from one generation to another. One of the interesting features of foundation legislation in Jersey will be the level of regulation. I think the new climate is a threat to some international centres but not all of them. Jersey has long believed in a level playing field and transparency.”

Geoff Cook, chief executive of Jersey Finance, delivers a similarly robust message. “Jersey has signed 12 Tax Information Exchange Agreements to date including four with G20 nations – the USA, the UK, Germany, and most recently, France,” he says. “The French agreement provides for certain property tax exemptions for people who own French property through Jersey companies and trusts.”

Peter Niven, chief executive of Guernsey Finance, echoes the point. “We have now signed 13 Tax Information Exchange Agreements, one more than the benchmark set by the Organisation for Economic Co-operation and Development (OECD) for the most compliant jurisdictions on transparency,” he observes.