SCHEDULE[1]
ARRANGEMENT BETWEEN HER
MAJESTY’S GOVERNMENT AND THE STATES OF JERSEY FOR THE AVOIDANCE OF DOUBLE
TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME
1.
(1) The
taxes which are the subject of this arrangement are –
(a) In
the United Kingdom:
The income tax
(including surtax) and the profits tax (hereinafter referred to as
“United Kingdom tax”).
(b) In
Jersey:
The income tax
(hereinafter referred to as “Jersey tax”)
(2) This
Arrangement shall also apply to any other taxes of a substantially similar
character imposed in the United Kingdom or Jersey after this Arrangement has
come into force.
2.
(1) In
this Arrangement, unless the context otherwise requires –
(a) The
term “United Kingdom” means Great Britain and Northern Ireland but,
when used in a geographical sense, means the territory and territorial sea of
Great Britain and Northern Ireland and the areas beyond that territorial sea
over which Great Britain and Northern Ireland exercise sovereign rights or
jurisdiction in accordance with their domestic law and international law.
(aa) The term
“Jersey” means the Bailiwick of Jersey including the territorial
sea.
(b) The
terms “one of the territories” and “the other
territory” mean the United Kingdom or Jersey, as the context requires.
(c) The
term “tax” means United Kingdom tax or Jersey tax, as the context
requires.
(d) The
term “person” includes any body of persons, corporate or not
corporate.
(e) The
term “company” includes any body corporate.
(f) The
terms “resident of the United Kingdom” and “resident of
Jersey” mean respectively any person who is resident in the United
Kingdom for the purposes of United Kingdom tax and not resident in Jersey for
the purposes of Jersey tax and any person who is resident in Jersey for the
purposes of Jersey tax and not resident in the United Kingdom for the purposes
of United Kingdom tax; and a company shall be regarded as resident in the
United Kingdom if its business is managed and controlled in the United Kingdom
and as resident in Jersey if its business is managed and controlled in Jersey.
(g) The
terms “resident of one of the territories” and “resident of
the other territory” mean a person who is a resident of the United
Kingdom or a person who is a resident of Jersey, as the context requires.
(h) The
terms “United Kingdom enterprise” and “Jersey
enterprise” mean respectively an industrial or commercial enterprise or
undertaking carried on by a resident of the United Kingdom and an industrial or
commercial enterprise or undertaking carried on by a resident of Jersey; and
the terms “enterprise of one of the territories” and
“enterprise of the other territory” mean a United Kingdom
enterprise or Jersey enterprise, as the context requires.
(i) The
term “industrial or commercial profits” includes rentals in respect
of cinematograph films.
(j) The
term “permanent establishment”, when used with respect to an
enterprise of one of the territories, means a branch, management or other fixed
place of business, but does not include an agency unless the agent has, and
habitually exercises, a general authority to negotiate and conclude contracts
on behalf of such enterprise or has a stock of merchandise from which he
regularly fills orders on its behalf.
(k) the
term “taxation authority” means:
(i) in the United
Kingdom, the Commissioners for Her Majesty’s Revenue and Customs or their
authorised representative:
(ii) in
Jersey, the Treasury and Resources Minister or his authorised representative.
An enterprise of one of
the territories shall not be deemed to have a permanent establishment in the
other territory merely because it carries on business dealings in that other
territory through a bona fide broker or
general commission agent acting in the ordinary course of his business as such.
The fact that an
enterprise of one of the territories maintains in the other territory a fixed
place of business exclusively for the purchase of goods or merchandise shall
not of itself constitute that fixed place of business a permanent establishment
of the enterprise.
The fact that a company
which is a resident of one of the territories has a subsidiary company which is
a resident of the other territory or which is engaged in trade or business in
that other territory (whether through a permanent establishment or otherwise)
shall not of itself constitute that subsidiary company a permanent
establishment of its parent company.
(2) Where
under this Arrangement any income is exempt from tax in one of the territories
if (with or without other conditions) it is subject to tax in the other
territory, and that income is subject to tax in that other territory by
reference to the amount thereof which is remitted to or received in that other
territory, the exemption to be allowed under this Arrangement in the
first-mentioned territory shall apply only to the amount so remitted or received.
(3) In
the application of the provisions of this Arrangement by the United Kingdom or
Jersey, any term not otherwise defined shall, unless the context otherwise
requires, have the meaning which it has under the laws of the United Kingdom,
or, as the case may be, Jersey, relating to the taxes which are the subject of
this Arrangement.
3.
(1) The
industrial or commercial profits of a United Kingdom enterprise shall not be
subject to Jersey tax unless the enterprise is engaged in trade or business in
Jersey through a permanent establishment situated therein. If it is so engaged,
tax may be imposed on those profits by Jersey but only on so much of them as is
attributable to that permanent establishment.
(2) The
industrial or commercial profits of a Jersey enterprise shall not be subject to
United Kingdom tax unless the enterprise is engaged in trade or business in the
United Kingdom through a permanent establishment situated therein. If it is so
engaged, tax may be imposed on those profits by the United Kingdom, but only on
so much of them as is attributable to that permanent establishment.
(3) Where
an enterprise of one of the territories is engaged in trade or business in the
other territory through a permanent establishment situated therein, there shall
be attributed to that permanent establishment the industrial or commercial
profits which it might be expected to derive from its activities in that other
territory if it were an independent enterprise engaged in the same or similar
activities under the same or similar conditions and dealing at arm’s
length with the enterprise of which it is a permanent establishment.
(4) No
portion of any profits arising from the sale of goods or merchandise by an
enterprise of one of the territories shall be attributed to a permanent
establishment situated in the other territory by reason of the mere purchase of
the goods or merchandise within that other territory.
(5) Where
profits include items of income or capital gains which are dealt with
separately in other paragraphs of this Arrangement, then the provisions of
those paragraphs shall not be affected by the provisions of this paragraph.
3A.
(1) Income
derived by a resident of one of the territories from immovable property
(including income from agriculture or forestry) situated in the other territory
may be taxed in that other territory.
(2) The
term “immovable property” shall have the meaning which it has under
the law of the territory in which the property in question is situated. The
term shall in any case include property accessory to immovable property, livestock
and equipment used in agriculture and forestry, rights to which the provisions
of general law respecting landed property apply, usufruct of immovable property
and rights to variable or fixed payments as consideration for the working of,
or the right to work, mineral deposits, sources and other natural resources;
ships, boats and aircraft shall not be regarded as immovable property.
(3) The
provisions of subparagraph (1) shall apply to income derived from the direct
use, letting, or use in any other form of immovable property.
(4) The
provisions of subparagraphs (1) and (3) shall also apply to the income from
immovable property of a United Kingdom enterprise and a Jersey enterprise.
3B.
(1) Gains
derived by a resident of one of the territories from the alienation of immovable
property referred to in paragraph 3A and situated in the other territory may be
taxed in that other territory.
(2) Gains
derived by a resident of one of the territories from the alienation of shares,
other than shares in which there is substantial and regular trading on a Stock
Exchange, or comparable interest, deriving more than 50 per cent of their value
directly or indirectly from immovable property situated in the other territory
may be taxed in that other territory.
4.
(1) Where:
(a) an
enterprise of one of the territories participates directly or indirectly in the
management, control or capital of an enterprise of the other territory; or
(b) the
same persons participate directly or indirectly in the management, control or
capital of an enterprise of one of the territories and an enterprise of the
other territory:
and in either case
conditions are made or imposed between the two enterprises in their commercial
or financial relations which differ from those which would be made between
independent enterprises, then any profits which would, but for those
conditions, have accrued to one of the enterprises, but, by reason of those
conditions, have not so accrued, may be included in the profits of that
enterprise and taxed accordingly.
(2) Where
one of the territories includes in the profits of an enterprise of that
territory – and taxes accordingly – profits on which an enterprise
of the other territory has been charged to tax in that other territory and the
profits so included are profits which would have accrued to the enterprise of
the first-mentioned territory if the conditions made between the two
enterprises had been those which would have been made between independent
enterprises, then that other territory shall make an appropriate adjustment to
the amount of the tax charged therein on those profits. In determining such
adjustment, due regard shall be had to the other provisions of this Arrangement
and the taxation authorities of the territories shall if necessary consult each
other.
5. Notwithstanding
the provisions of paragraphs 3 and 4, profits which a resident of one of
the territories derives from operating ships or aircraft shall be exempt from
tax in the other territory.
5A. Subject
to the provisions of paragraph 6, pensions and other similar remuneration
paid to an individual who is a resident of one of the territories shall be
taxable only in that territory.
6.
(1) Remuneration,
including pensions, paid by the Government of one of the territories to any
individual for services rendered to that Government in the discharge of
governmental functions shall be exempt from tax in the other territory if the
individual is not ordinarily resident in that other territory or (where the
remuneration is not a pension) is ordinarily resident in that other territory
solely for the purpose of rendering those services.
(2) The
provisions of this paragraph shall not apply to payments in respect of services
rendered in connection with any trade or business carried on by either of the
Governments for purposes of profit.
7.
(1) An
individual who is a resident of the United Kingdom shall be exempt from Jersey
tax on profits or remuneration in respect of personal (including professional)
services performed within Jersey in any year of assessment if –
(a) he is
present within Jersey for a period or periods not exceeding in the aggregate 183
days during that year, and
(b) the
services are performed for or on behalf of a person resident in the United Kingdom,
and
(c) the
profits or remuneration are subject to United Kingdom tax.
(2) An
individual who is a resident of Jersey shall be exempt from United Kingdom tax
on profits or remuneration in respect of personal (including professional)
services performed within the United Kingdom in any year of assessment if –
(a) he is
present within the United Kingdom for a period or periods not exceeding in the
aggregate 183 days during that year, and
(b) the
services are performed for or on behalf of a person resident in Jersey, and
(c) the
profits or remuneration are subject to Jersey tax.
(3) The
provisions of this paragraph shall not apply to the profits or remuneration of
public entertainers such as stage, motion picture or radio artists, musicians
and athletes.
8. A
student or business apprentice from one of the territories who is receiving
full-time education or training in the other territory shall be exempt from tax
in that other territory on payments made to him by persons in the
first-mentioned territory for the purposes of his maintenance, education or
training.
9.
(1) Subject
to the provisions of the law of the United Kingdom regarding the allowance as a
credit against United Kingdom tax of tax payable in a territory outside the
United Kingdom, Jersey tax payable, whether directly or by deduction in respect
of income from sources within Jersey, other than dividends or debenture
interest payable by a company resident in Jersey, shall be allowed as a credit
against any United Kingdom tax payable in respect of that income.
(2) Subject
to such provisions (which shall not affect the general principle hereof) as may
be enacted in Jersey regarding the allowance as a credit against Jersey tax of
tax payable in a territory outside Jersey, United Kingdom tax payable, whether
directly or by deduction, in respect of income from sources within the United
Kingdom, other than dividends or debenture interest payable by a company
resident in the United Kingdom, shall be allowed as a credit against any Jersey
tax payable in respect of that income.
(3) Where
no credit is allowable under sub-paragraph (1) or sub-paragraph (2)
of this paragraph in respect of tax on income subject to both Jersey tax and
United Kingdom tax, such relief from United Kingdom tax shall be allowed in respect
of the double taxation as would have been allowed under the law in force in the
United Kingdom if the present arrangement had not been made:
Provided that in a case to
which the proviso to Section 24 of the United Kingdom Finance Act, 1920
applies, the relief allowable under this sub-paragraph shall be left out of
account in the computations of tax to be made under the said proviso.
(4) For
the purposes of this paragraph profits or remuneration for personal (including
professional) services performed in one of the territories shall be deemed to
be income from sources within that territory, and the services of an individual
whose services are wholly or mainly performed in ships or aircraft operated by
a resident of one of the territories shall be deemed to be performed in that
territory.
(5) Where
Jersey income tax is payable for a year for which this Arrangement has effect
in respect of any income in respect of which United Kingdom income tax is
payable for a year prior to the year beginning on the 6th April, 1951,
then in the case of a person resident in Jersey, the Jersey income tax shall
for the purposes of sub-paragraph (2) of this paragraph, be deemed to be
reduced by the amount of any relief allowable in respect thereof under the
provisions of Section 27 of the United Kingdom Finance Act, 1920 or
Section 36 of the United Kingdom Finance Act, 1950.
9A. Notwithstanding
the preceding provisions of this Arrangement, any person who is assessed in
accordance with, or is exempt from assessment by virtue of, the provisions
of –
(a) Article 123A
of the Income Tax
(Jersey) Law 1961, as amended; or
(b) Article 123B
of the Income Tax (Jersey)
Law 1961, as amended,
in respect of any income
or profits shall not be entitled under this Arrangement to any relief or
exemption from United Kingdom tax which is computed by reference to that income
or those profits, unless that person is assessed under those provisions on the
whole of that income or those profits at a rate which is not less than the
standard rate for the year in question under the Finance (Jersey) Law 1994
and subsequent enactments.
9B.
(1) Where
a resident of one of the territories considers that the actions of one or both
of the territories result or will result for him in taxation not in accordance
with the provisions of this Arrangement, he may, irrespective of the remedies
provided by the domestic law of those territories, present his case to the
taxation authority of the territory of which he is a resident. The case must be
presented within three years from the first notification of the action
resulting in taxation not in accordance with the provisions of this Arrangement
or, if later, within six years from the end of the taxable year or chargeable
period in respect of which that taxation is imposed or proposed.
(2) The
taxation authority shall endeavour, if the objection appears to it to be
justified and if it is not itself able to arrive at a satisfactory solution, to
resolve the case by mutual agreement with the taxation authority of the other
territory, with a view to the avoidance of taxation which is not in accordance
with this Arrangement. Any agreement reached shall be implemented
notwithstanding any time limits or other procedural limitations in the domestic
law of the territories, except such limitations as apply for the purposes of
giving effect to such an agreement.
(3) The
taxation authorities of the territories shall endeavour to resolve by mutual
agreement any difficulties or doubts arising as to the interpretation or
application of this Arrangement. They may also consult together for the
elimination of double taxation in cases not provided for in the Arrangement.
(4) The
taxation authorities of the territories may communicate with each other
directly for the purpose of reaching, an agreement in the sense of this
paragraph.
10.
(1) The
taxation authorities of the United Kingdom and Jersey shall exchange such information
(being information available under their respective taxation laws) as is
necessary for carrying out the provisions of this Arrangement or for the
prevention of fraud or the administration of statutory provisions against legal
avoidance in relation to the taxes which are the subject of this Arrangement.
Any information so exchanged shall be treated as secret and shall not be
disclosed to any persons other than those concerned with the assessment and
collection of the taxes which are the subject of this Arrangement. No
information shall be exchanged which would disclose any trade secret or trade
process.
(2)
11. This
Arrangement shall come into force on the date on which the last of all such
things shall have been done in the United Kingdom and Jersey as are necessary
to give the Arrangement the force of law in the United Kingdom and Jersey
respectively and shall thereupon have effect –
(a) In
the United Kingdom:
as respects income tax,
for any year of assessment beginning on or after the 6th April, 1951;
as respects surtax for
any year of assessment beginning on or after the 6th April, 1950; and
as respects profits
tax, in respect of the following profits –
(i) profits arising
in any chargeable accounting period beginning on or after the 1st April, 1951;
(ii) profits
attributable to so much of any chargeable accounting period falling partly
before and partly after that date as falls after that date;
(iii) profits
not so arising or attributable by reference to which income tax is, or but for
the present Arrangement would be, chargeable for any year of assessment
beginning on or after 6th April, 1951;
(b) In
Jersey:
as respects income tax,
for the year of assessment beginning on the first day of January, 1951 and
subsequent years.
12. This
Arrangement shall continue in effect indefinitely but either of the Governments
may, on or before the 30th day of June in any calendar year after the year 1952
give notice of termination to the other Government and, in such event, this
Arrangement shall cease to be effective –
(a) In
the United Kingdom:
as respects income tax
for any year of assessment beginning on or after the 6th April in the calendar
year next following that in which the notice is given;
as respects surtax for
any year of assessment beginning on or after the 6th April in the calendar year
in which the notice is given; and
as respects profits
tax, in respect of the following profits –
(i) profits arising
in any chargeable accounting period beginning on or after the 1st April in the
calendar year next following that in which the notice is given;
(ii) profits
attributable to so much of any chargeable accounting period falling partly
before and partly after that date as falls after that date;
(iii) profits
not so arising or attributable by reference to which income tax is chargeable
for any year of assessment beginning on or after the 6th April in that next
following calendar year;
(b) In
Jersey:
as respects income tax,
for any year of assessment beginning on or after the first day of January in
the calendar year next following that in which such notice is given.