Signature Of Tax Cooperation Agreements With Jersey And Guernsey
The Minister for Finance, Mr Brian Lenihan, TD, today (26/03/09) signed tax cooperation agreements between Ireland and Jersey, and Ireland and Guernsey.
There are two agreements with each:
- a tax information exchange agreement, and
- an agreement for affording relief from double taxation with respect to certain income of individuals and establishing a mutual agreement procedure in connection with the adjustment of profits of associated enterprises.
The Tax Information Exchange Agreement is based on a model agreement developed by the Organisation for Economic Co-operation and Development (OECD). It will allow the Revenue Commissioners to request information from their Jersey or Guernsey counterparts that is relevant to an Irish tax investigation. Such information would typically relate to bank accounts or the beneficial ownership of companies or trusts. Likewise, Jersey and Guernsey authorities may request the Revenue Commissioners to obtain and provide information of relevance to their tax investigations.
As a consequence of the new relationship, an Agreement Affording Relief from Double Taxation with respect to Certain Income of Individuals and Establishing a Mutual Agreement Procedure in connection with the Adjustment of Profits of Associated Enterprises was also signed with each jurisdiction. This will reduce the potential for double taxation of certain income of individuals. There are also provisions in the agreement that allow for consultation in relation to potential double taxation of company profits.
In a Joint Declaration signed with each jurisdiction, the parties have undertaken to continue to work together in a spirit of transparency and cooperation to examine what measures could be adopted to further enhance and broaden their bilateral political and economic relationship.
Ireland welcomes the commitment of Jersey and Guernsey to implement the OECD standards of transparency and exchange of information in tax matters and their willingness to enter into tax information exchange agreements (TIEAs). The signing today of these agreements represents a new chapter in relations between Ireland and both jurisdictions.
[Ends 26/03/09]
Background Note
Tax Information Exchange Agreement
The Tax Information Exchange Agreements (TIEA) signed today will allow the Revenue Commissioners to request information from their Jersey or Guernsey counterparts that is relevant to an Irish tax investigation. Such information would typically relate to bank accounts or the beneficial ownership of companies or trusts. Likewise, the Jersey and Guernsey authorities may request the Revenue Commissioners to obtain and provide information of relevance to their tax investigations.
The signing of this agreement is as a direct result of work undertaken by the OECD in relation to transparency and exchange of information in tax matters. In 2002 both Jersey and Guernsey committed to work with the OECD to develop these principles and they have since taken a lead role amongst smaller international financial centres in implementing them.
In 2002 an OECD group, in which Ireland participated, developed the OECD Model Tax Information Exchange Agreement. Since then OECD member countries have been involved in negotiations to conclude bilateral TIEAs with those jurisdictions that have committed to the OECD principles. To date, approximately 70 such agreements have been concluded. Of these, Jersey and Guernsey have signed 13 each - with USA, the Netherlands, France, Germany, UK, the seven Nordic countries (Denmark, Faroe Islands, Finland, Greenland, Iceland, Norway and Sweden) and Ireland.
In April 2008 Ireland signed similar agreements with the Isle of Man. In addition, the Revenue Commissioners have been engaged in negotiations for TIEAs with the Cayman Islands and the British Virgin Islands, both of which are ongoing. The need to negotiate similar agreements with other jurisdictions is being kept under review.
Agreement Affording Relief from Double Taxation for Individuals and Establishing a Mutual Agreement Procedure for Transfer Pricing Cases
In addition to the Tax Information Exchange Agreement, an Agreement Affording Relief from Double Taxation with respect to Certain Income of Individuals and Establishing a Mutual Agreement Procedure in connection with the Adjustment of Profits of Associated Enterprises was also signed today with Jersey and Guernsey.
This agreement will prevent double taxation of certain sources of income of individuals, in particular pensions from past employment, salaries and pensions of government employees and income of students. There are also provisions in the agreement that allow both countries to resolve cases of potential double taxation arising from adjustments of profits of companies. All of these provisions are found in typical double taxation agreements.
Joint Declaration
The parties also signed a Joint Declaration, which acknowledges the commitment of both parties to combat money laundering and tackle financial and other crimes, including fiscal crime. Ireland will use its best endeavours to support Jersey and Guernsey in relation to EU Directives and Regulations as they relate to standards of compliance of third countries. Ireland and each jurisdiction have undertaken to work together to examine other measures to further enhance bilateral political and economic relations.