Channel Islands loses tax status
Discussion
No it hasn't.
The tax regimes in the Channel Islands (and the Isle of Man and other low tax European areas) have not changed at all. What has happened is that banks and other financial institutions based in these places are now obliged to disclose the details of accounts held with them of citizens and organisations resident in EU countries.
If a UK resident individual has been obeying the already existing tax disclosure regulations under Self Assessment, under the new rules, they will not be doing anything they haven't been doing already. If they haven't been disclosing their income to the UK tax authorities up to now, they will have been comitting a criminal offence in any case.
The new element of this legislation is that, if an individual chooses NOT to disclose (as I said, already a criminal offence), the Channel Islands based bank will be obliged to deduct a 35% Witholding Tax.
These regulations have been primarilly brought in to prevent illegal organisations and criminals hiding money in offshore accounts. Of course, the by-product of these new money laundering rules and regulations ius that the tax authorities throughout Europe will now have a clearer picture of peoples' financial situations.
A lot of these rules have been implemented because of pressure from the US who have been constantly annoyed that countries like Switzerland have been used to hide terrorist and criminal money for decades.
>> Edited by Eric Mc on Monday 6th June 11:50
The tax regimes in the Channel Islands (and the Isle of Man and other low tax European areas) have not changed at all. What has happened is that banks and other financial institutions based in these places are now obliged to disclose the details of accounts held with them of citizens and organisations resident in EU countries.
If a UK resident individual has been obeying the already existing tax disclosure regulations under Self Assessment, under the new rules, they will not be doing anything they haven't been doing already. If they haven't been disclosing their income to the UK tax authorities up to now, they will have been comitting a criminal offence in any case.
The new element of this legislation is that, if an individual chooses NOT to disclose (as I said, already a criminal offence), the Channel Islands based bank will be obliged to deduct a 35% Witholding Tax.
These regulations have been primarilly brought in to prevent illegal organisations and criminals hiding money in offshore accounts. Of course, the by-product of these new money laundering rules and regulations ius that the tax authorities throughout Europe will now have a clearer picture of peoples' financial situations.
A lot of these rules have been implemented because of pressure from the US who have been constantly annoyed that countries like Switzerland have been used to hide terrorist and criminal money for decades.
>> Edited by Eric Mc on Monday 6th June 11:50
Thanks Eric. Here's a bit more flesh:
The 'European Union Savings Directive' (ESD) comes into force on 1 July 2005. As I understand it there are two options.
1) If the investor does nothing, the b/soc will deduct tax at a rate determined by the ESD from any interest paid to the account after 1 July 2005.
OR
2) Complete a form and the b/soc will provide information about the investor and the interest credited after 1 July 2005 to the tax authority in your country of residence.
There is no mention of tax on interest credited prior to that date, nor of a 35% 'witholding tax', unless that is the part I bolded above. If so, why is it 35% and not the normal UK income tax rate?
The 'European Union Savings Directive' (ESD) comes into force on 1 July 2005. As I understand it there are two options.
1) If the investor does nothing, the b/soc will deduct tax at a rate determined by the ESD from any interest paid to the account after 1 July 2005.
OR
2) Complete a form and the b/soc will provide information about the investor and the interest credited after 1 July 2005 to the tax authority in your country of residence.
There is no mention of tax on interest credited prior to that date, nor of a 35% 'witholding tax', unless that is the part I bolded above. If so, why is it 35% and not the normal UK income tax rate?
As ever, things are not as simple as they first appear. The ESD tax deduction rates have already been set. they are as follows:
1 July 2005 to 30 June 2008 - 15%
1 July 2008 to 30 June 2011 - 20%
1 July 2011 onwards - 35%
This is based on a recent communication I have seen from HSBC about how these rules will be implemented.
1 July 2005 to 30 June 2008 - 15%
1 July 2008 to 30 June 2011 - 20%
1 July 2011 onwards - 35%
This is based on a recent communication I have seen from HSBC about how these rules will be implemented.
You will note that the "tax haven" countries volunteering to get involved in this scheme are NON-EU COUNTRIES.
The Isle of Man, the Channel Islands, Switzerland, Andorra and all the rest are not members of the EU. They could have stayed outside of this but huge pressure has been brought to bear on them - mainly from the Bush administration.
This would have happened sooner or later. The notion that crooks, terrorists and other assorted "bad guys" can stash their ill gotten gains in secluded tax havens is becoming obsolete.
What I would like to know is, have the other, non-European, tax havens around the world been encouraged to join in as well? If they haven't, all that will happen is that the bad guys will move their funds to those other tax havens.
The Isle of Man, the Channel Islands, Switzerland, Andorra and all the rest are not members of the EU. They could have stayed outside of this but huge pressure has been brought to bear on them - mainly from the Bush administration.
This would have happened sooner or later. The notion that crooks, terrorists and other assorted "bad guys" can stash their ill gotten gains in secluded tax havens is becoming obsolete.
What I would like to know is, have the other, non-European, tax havens around the world been encouraged to join in as well? If they haven't, all that will happen is that the bad guys will move their funds to those other tax havens.
But is it really to catch the 'baddies' or simply to screw down EU citizens?
Two more examples: ID cards sold to us on an anti-terrorism angle, but will actually be used to control the population, and road charging: sold as congestion-cutting but actually tells the authorities where everyobody goes, 24/7?
Criminals will always be criminals; it's the likes of you and me they prefer to enforce things on.
Two more examples: ID cards sold to us on an anti-terrorism angle, but will actually be used to control the population, and road charging: sold as congestion-cutting but actually tells the authorities where everyobody goes, 24/7?
Criminals will always be criminals; it's the likes of you and me they prefer to enforce things on.
Nope.
If you are a UK resident, you are liable to UK tax on your worldwide earnings. The money does not have to be repatriated into the UK. Therefore, you are obliged, inder law, to declare your overseas income on your Self Assessment tax return. Failure to do constitutes a criminal offence. This has been part of British tax law for over 100 years - so you can't blame the EU on that one
When I hear people say "I have nothing to hide" I usually think, "they don't know enough to know whether they have anything to hide or not".
If you are a UK resident, you are liable to UK tax on your worldwide earnings. The money does not have to be repatriated into the UK. Therefore, you are obliged, inder law, to declare your overseas income on your Self Assessment tax return. Failure to do constitutes a criminal offence. This has been part of British tax law for over 100 years - so you can't blame the EU on that one
When I hear people say "I have nothing to hide" I usually think, "they don't know enough to know whether they have anything to hide or not".
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