Jersey officials have voiced their objection to a front-page report in the Financial Times newspaper published on September 26 which claimed the island identified a 'loophole' in the European Union's plans to clamp down on tax evasion, through the establishment of trusts.
According to the report, Jersey was accredited with the finding that high net worth individuals who establish discretionary trusts to manage their wealth will escape paying tax under the EU Savings directive rules. This is because the rules apply to individuals' savings income, and not income received by a company. Through a trust structure, trustees can establish a company and open a bank account. Income received by a company is not required to be reported to member states.
However, Jersey senior officials are annoyed that the jurisdiction was singled out by the newspaper as being the location which has shed light on the matter, which is actually quite a well-known fact.
"Most City professionals will be aware that the EU Savings Directive was always directed only at individuals resident in the European Union and it has been reported many times that the Directive would not apply to companies or trusts," said Phil Austin, chief executive of Jersey Finance, the body which was established to market Jersey as a international financial services centre.
"It is a fact that trusts fall out of the remit of the Directive. This is not a new development," he continued.
"Professionals engaged in legitimate tax planning in all the leading financial centres both onshore and offshore have understood since an early stage in the negotiating process that the Directive applied to the savings belonging to EU resident individuals only."
Jersey is also annoyed that the newspaper reported the UK Treasury was 'angry' that the British Crown Territories opted for withholding tax rather than exchange of information. According to Austin, Jersey's understanding of its relationship with the Treasury was described as 'cordial and constructive'.
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