Brussels, 16/02/2011 (Agence Europe) - Along with adopting the directive on administrative cooperation on direct taxation issues, the 15 February 2011 ECOFIN Council took note of the discussions at the High Level Working Party for Tax issues (HLWP) and its Code of Conduct on company taxation, and said that the special systems in place in Jersey and the Isle of Man needed to be examined in this connection.
The Code of Conduct does not cover the taxation of individuals, but the HLWP says that it does apply to the tax systems in place for individuals in the Isle and Man and Jersey because shareholders are not taxed solely on their actual income but also on expected income, and the two combined are used to decide the taxation of profit-sharing in companies for individual shareholders. Company profits are taxed at shareholder level through the taxation of expected income and distribution rules. This mechanism was designed as a system to tax shareholders and companies alike to ensure combined taxation of company profits but it only applies to shareholders and companies registered in Jersey, aiming to maintain national tax income and attract non-resident shareholders. It is a different way of taxing the profits of local companies rather than tax avoidance.
For this reason, the ECOFIN Council decided that Jersey can only keep its 0/10 tax regime until 1 January 2012 for company taxation, whereby the profits of most companies, owned by residents or non-residents, are taxed at 0% and some finance companies at 10%. (F.G./transl.fl)