Ratification of Agreement for Exchange of Info Re Tax Matters - Federal Republic of Germany & States of Jersey

STATES OF JERSEY

RATIFICATION OF THE AGREEMENT FOR THE EXCHANGE OF INFORMATION RELATING TO TAX  MATTERS BETWEEN THE FEDERAL REPUBLIC OF GERMANY AND THE STATES OF JERSEY

Lodged au Greffe on 4th November 2008 by the Chief Minister

STATES GREFFE

PROPOSITION

THE STATES are asked to decide whether they are of opinion

to r a tify the Agreement for the Exchange of Information Relating to Tax Matters between the Federal

Republic of Germany and the States of Jersey as set out in the Appendix to the report of the Chief Minister dated 16th October 2008.

CHIEF MINISTER

REPORT

Agreement to be entered into with the Federal Republic of Germany for the exchange of information relating to tax matters.

1. T  h e States are askedto ratify the signed Agreement to be entered into with the Federal Republic of Germany for theExchangeof Information Relating to Tax Matters attached asanAppendixto this report.

Background

2. In February 2002 Jersey entered into a political commitment to support an OECD tax initiative on transparency and information exchange through the negotiationof tax information exchangeagreements with each of the OECDMember States. Thecommitmentwas subject tothe condition that there was a level playing fieldembracing all OECDMember States, and the main competitor jurisdictions in the provision of financial services (Hong KongChina,Luxembourg,Singaporeand Switzerland), twoof whicharealsoOECDMember States.
3. A t otally level playing field is not in immediateprospect.At the same time Jerseyremains fully committed to the principles of transparency and effective exchangeofinformation. This conflicthas been resolved by requiring an economicbenefitspackagewhennegotiatingtax information exchange agreements with individual OECDMember States, a package that is expected to be sufficient to offset any "costs" that are expected tobe incurred ingoingaheadofthecreationof the desired level playing field.
4. T h e CouncilofMinisters' current negotiating strategy in respect of tax information exchangeagreements is –

• to build up good political and economic relationships with individual countries, particularly those in the European Union;

• to obtain general support for the Island where matters affecting the Island are being considered within international fora;

• to obtain the removal of key barriers to market access, such as black lists;

• to recognise that all the Island's wishes may not be achieved at the outset, and establish a platform from which to build in securing further benefits in the future;

• to press for action to be taken by the OECD Member States against the non-committed/non-co- operative jurisdictions, including Luxembourg and Switzerland, who may otherwise be gaining

advantage from that position.

5. T h e Councilof Ministers recognises that the signing of tax information exchangeagreements is of concern to the finance industrybecauseof the absenceof a totally level playing field, the wish to see concrete offsetting economic benefits, and theevidenceofbusinessbeing lost to Switzerland andother less co- operative financial centres. However,whilerecognising the force ofthesearguments,andtaking them fully into account through a consultative process with industry in advanceofany further agreements being entered into, it isbelieved that improving the political and economic relationship with individual countries, suchas the FederalRepublicofGermany,canbe in the Island's best long-term interests. Support is being obtained thereby when matters affecting the Island are being considered within international fora. It is alsoconsideredthat, with the improvedeconomicand political relationship, there will be a progressiveremovalofkey barriers tomarketaccess.
6. T h e CouncilofMinisters see the issue as oneof balance between –

• the impact on business arising from the perception that Jersey is ahead of its competitors on

transparency;

• the impact on business of negative action taken by OECD/EU Member States against non-co- operative jurisdictions if they should decide that Jersey is in that category;

• the impact on business of the positive action taken by OECD/EU Member States when they recognise Jersey as a co-operative jurisdiction.

7. T h e procedureadopted in respect of individual agreements is for industrytobe consulted, and for the viewsof industry to be taken into accountby the Councilof Ministers in decidingwhethertosupport the signing of a tax information exchangeagreement. If theCouncilofMinisters decide that it would bein the Island's best interest for an agreementtobe signed, both parties to the agreement then exchange signed agreements which allows both to start their ratification procedures contemporaneously. Agreements are signed by the Chief Minister inaccordance with the provisions of Article 18(2)of the States of Jersey Law 2005 and paragraph 1.8.5 of the Strategic Plan 2006–2011 adopted bythe States on 28th June2006.Subsequentto the signing by the Chief Minister, agreementsarepresentedto the States for ratification, are published, entered into the official record andregulations are madefor the agreements to enter into force when the domestic procedures oftheother party alsohavebeencompleted.
8. T h e States on 29th January2008adopted the Taxation (Exchangeof Information with Third Countries) (Jersey) Regulations 2008.These Regulations were adopted to enable the States to fulfil its obligations to the KingdomoftheNetherlandsunderanAgreement for the exchange of information relating to tax matters entered into on 20th June 2007. TheScheduletothese Regulations listed the Netherlands as a Third Country. As further Agreementsare entered into, the 2008 Regulations need to beamendedto include in the Schedule the jurisdiction and taxes concerned. Thenecessary Regulations toprovide for the inclusion in the Schedule of the Federal Republic ofGermany and the relevant taxes are beingpresented to the States for adoption subsequent to the ratification oftheAgreementfor the exchangeof information relating to tax matters being entered into with the Federal Republic (P.172/2008).
9. T h e Agreementsdonotcome into forceuntil both ofthe Parties concerned have completedtheirown domestic procedures.To address the fact that there will be differences intiming in the completion of the respective procedures,provisionis being made for the Chief Minister to amendthe Regulations byOrder to specify the date when anagreement is to come into force. The date will beincluded in a fourth column in the Schedule attached to the Regulations.
10. W ith the adoption of the Regulationstoprovide for the inclusionin the Schedule of the Federal Republic of Germany(P.172/2008) the opportunity is beingtakento include in the fourthcolumnin the Schedule the date of1st March 2008when the agreementforthe exchange of information relating to tax matter with theKingdom of the Netherlands came into force.

Agreement with the Federal Republic of Germany

11. T h e negotiations with the Federal Republic ofGermany produced agreementonthe following, attachedas an Appendixto this report –

(a ) a t ax information exchange agreement which is consistent with that signed with the United States

of America in 2002 and that signed with the Kingdom of the Netherlands in 2007, both of which have been ratified by the States.

T h e A g r e e m ent provides for the exchange of information on taxation on request, however that

request has to be formulated in writing with the greatest detail possible. There can be no "fishing expedition". The Agreement will come into force only once the States have ratified the Agreement and approved the necessary Regulations, and the Federal Republic of Germany has completed its own domestic procedures.

A tt a ch e d t o the Agreement is a protocol which refers to data protection (a specific German

requirement not matched in other agreements but one with which the Jersey Data Protection Commission is comfortable) and to the arrangements for the allocation of the "costs" incurred in responding to an information request. In the case of the USA and the Netherlands, the cost recovery arrangements were dealt with in a separate exchange of letters, but were in the same terms as the German Protocol;

(b ) a n agreement on co-operation in tax matters and the avoidance of double taxation with respect to

certain items of income.

T h is a g re e m  ent provides for –

• occupation pensions to be taxable only in the country of residence of the recipient;

• payments made to students for their maintenance, education and training to be free of tax;

• the profits of associated enterprises to be treated as if they had been independent enterprises;

(c ) a P olitical Declaration.

A c c o m p  an y i ng the tax agreements is a joint Political Declaration which includes statements to the

effect that –

• following the entry into force of the agreements, Germany and Jersey will continue the dialogue to examine what measures could be adopted to further enhance and broaden

their political and economic relationship including the further clarification of elements of double taxation, discrimination and other undesired tax barriers and the further extension of the arrangements for information exchange; an assurance by Germany that Jersey will be fully and equally treated by the German authorities in common with other countries included in what is described as the

community of nations committed to international co-operation and information exchange on tax matters;

• Germany recognises Jersey's commitment to comply with the international standards of money laundering, terrorist financing and financial regulation;

• subject to the outcome of the IMF review, Germany will use its best endeavours to ensure that where EU Directives or Regulations include provisions referring to the

position of Third Countries, particularly in relation to assessments of equivalence in compliance with EU standards and access to EU markets, Jersey will be treated as fairly and favourably as other Third Countries.

12. T h e negotiation of the agreements has helped to establish a good relationship with officials in the Ministry of Finance of the Federal Republic of Germany,andhashelpedimprovetheirunderstandingof and influence favourably their attitude towardsthe Island. Theagreements are considered to enhance the Island's international personality andgenerallytoleadto a more favourable response to the Islandon a wide range of market access and other economic/political issues. As noted above, there will be a continuing dialogue regarding elements of double taxation, discrimination and other undesired tax barriers, and this is a matter to which the finance industry attaches particular importance.
13. T h ere are no implications for the financial or manpower resources of the States arising from the ratification and implementation oftheagreements with the Federal Republic ofGermany.

16th October 2008

APPENDIX

Agreement between

the Government of Jersey and

the Government of

the Federal Republic of Germany

for the Exchange of Information relating to Tax Matters

the Government of the Federal Republic of Germany, hereinafter the "Contracting Parties" –

Whereas the Government of the Federal Republic of Germany and the Government of Jersey recognise that present legislation already provides for co-operation and the exchange of information in criminal tax matters;

Whereas the Contracting Parties have long been active in international efforts in the fight against financial and other crimes, including the targeting of terrorist financing;

Whereas it is acknowledged that the Government of Jersey under the terms of their Entrustment from the United Kingdom have the right to negotiate, conclude, perform and, subject to the terms of this Agreement, terminate a tax information exchange agreement with the Government of the Federal Republic of Germany;

Whereas the Contracting Parties wish to enhance and facilitate the terms and conditions governing the exchange of information relating to all tax matters;

Whereas the Contracting Parties recognise that the following Agreement contains obligations on the part of the Contracting Parties only;

Have agreed as follows:

Article 1

Object and Scope of the Agreement

The competent authorities of the Contracting Parties shall provide assistance through exchange of information that is foreseeably relevant to the administration and enforcement of the respective laws of the Contracting Parties concerning taxes covered by this Agreement, including information that is foreseeably relevant to the determination, assessment and collection of such taxes, the recovery and enforcement of tax claims, or the investigation or prosecution of criminal tax matters. The rights and safeguards secured to persons by the laws or administrative practice of the requested Contracting Party remain applicable.

Article 2 Jurisdiction

A requested Contracting Party is not obligated to provide information which is neither held by its authorities nor in the possession of or obtainable by persons who are within its territorial jurisdiction.

Article 3 Taxes Covered

1. T h e taxeswhich are the subject of this Agreementare: (a ) in the caseof the Federal RepublicofGermany:

th e in c o m  e t ax (Einkommensteuer),

th e co r p o r a ti on tax (Körperschaftsteuer), th e tr a d e t a x (Gewerbesteuer),

th e ca p i ta l t a x (Vermögensteuer) and

th e in h e r it a n ce tax (Erbschaftsteuer),

in c l u d in g th e supplements levied thereon;

(b ) in the case of Jersey: th e in c o m  e t ax.

2. T h isAgreement shall applyalsoto any identical or substantially similar taxes imposed after the date of signature of the Agreementinadditiontoor in place of the existing taxes if the Contracting Parties so agree. Thecompetent authorities of the Contracting Parties shall notify eachother of anysubstantial changes to the taxation andrelated information gathering measures covered by theAgreement.

Article 4 Definitions

1. F o r the purposes of this Agreement,unlessotherwisedefined:

(a ) " F ederal Republic of Germany", when used in a geographical sense, means the area in which the

tax law of the Federal Republic of Germany is in force,

(b ) "J e rsey" when used in a geographical sense, means the Bailiwick of Jersey, including its territorial

sea,

(c ) "c o mpetent authority" means:

( i) i n th e case of the Federal Republic of Germany, the Federal Ministry of Finance or the

agency to which it has delegated its power; which in respect of criminal tax matters will be the Federal Ministry of Justice or the agency to which it has delegated its power,

(i i) i n t h e case of Jersey, the Treasury and Resources Minister or his authorised representative, (d ) "p e rson" includes an individual, a company and any other body of persons,

( e) " c ompany" means any body corporate or any entity that is treated as a body corporate for tax

purposes,

( f) " p u blicly traded company" means any company whose principal class of shares is listed on a

recognised stock exchange provided its listed shares can be readily purchased or sold by the public. Shares can be purchased or sold "by the public" if the purchase or sale of shares is not implicitly or explicitly restricted to a limited group of investors,

( g ) " p rincipal class of shares" means the class or classes of shares representing a majority of the

voting power and value of the company,

(h ) "r e cognised stock exchange" means any stock exchange agreed upon by the competent authorities

of the Contracting Parties,

(i ) " c o llective investment fund or scheme" means any pooled investment vehicle, irrespective of legal

form. The term "public collective investment fund or scheme" means any collective investment fund or scheme provided the units, shares or other interests in the fund or scheme can be readily purchased, sold or redeemed by the public. Units, shares or other interests in the fund or scheme can be readily purchased, sold or redeemed "by the public" if the purchase, sale or redemption is not implicitly or explicitly restricted to a limited group of investors,

(j ) " t ax " means any tax to which the Agreement applies,

(k ) "r e questing Contracting Party" means the Contracting Party requesting information,

(l ) " r e quested Contracting Party" means the Contracting Party requested to provide information,

( m ) "i nformation gathering measures" means laws and administrative or judicial procedures that

enable a Contracting Party to obtain and provide the requested information,

(n ) "i n formation" means any fact, statement, document or record in any form whatever, (o ) "t a x matters" means all tax matters including criminal tax matters,

(p ) " cr iminal tax matters" means tax matters involving intentional conduct whether before or after the

entry into force of this Agreement which is liable to prosecution under the criminal laws of the requesting Contracting Party,

( q ) " c riminal laws" means all criminal laws designated as such under the respective law of the

Contracting Parties irrespective of whether such are contained in the tax laws, the criminal code or other statutes.

2. A n y term not defined in this Agreement shall, unless the context otherwise requires, have themeaning that it has at the time the request was made under the law of that Contracting Party,anymeaningunder the applicable tax laws of that Contracting Party prevailing over a meaning given to the term underother laws of that Contracting Party.

Article 5

Exchange of Information Upon Request

1. T h e competentauthorityofthe requested Contracting Partyshall provide upon request by the requesting Contracting Party information for the purposes referred to in Article 1. Such information shall be provided without regard to whether the requested Contracting Partyneeds such information for its own tax purposes or the conductbeing investigated would constitute a crimeunderthe laws of the requested Contracting Party if it had occurred in the territory of the requested Contracting Party. Thecompetent authority of the requesting Contracting Partyshall only make a request for information pursuant to this Article when it is unable to obtain the requested information by other means in its own territory, except whererecourse to such meanswould give riseto disproportionate difficulty.
2. If the information in the possession of the competent authority of the requested Contracting Partyisnot sufficient to enable ittocomply with the request for information, that Contracting Party shall use at its own discretion all applicable information gathering measures necessary to provide the requesting Contracting Party with the information requested, notwithstanding that the requested Contracting Party may not, at that time,needsuch information for its own tax purposes.
3. If specifically requested by the competentauthorityof the requesting Contracting Party, thecompetent authority of the requested Contracting Partyshallprovide information under this Article, tothe extent allowable under its laws, in the form of depositions of witnesses and authenticated copies oforiginal records.
4. E a ch Contracting Partyshallensure that its competent authorities, in accordance with the termsof this Agreement have the authority to obtain and provide uponrequest:

(a ) in f ormation held by banks, other financial institutions, and any person, including nominees and

trustees, acting in an agency or fiduciary capacity,

( b ) ( i)  i n f ormation regarding the beneficial ownership of companies, partnerships and other

persons, including in the case of collective investment funds and schemes, information on shares, units and other interests;

(i i ) i n th e case of trusts, information on settlors, trustees, protectors and beneficiaries; and in

the case of foundations, information on founders, members of the foundation council and beneficiaries,

p ro v i d e d t h a t this Agreement does not create an obligation on the Contracting Parties to obtain or

provide ownership information with respect to publicly traded companies or public collective investment funds or schemes unless such information can be obtained without giving rise to disproportionate difficulties.

5. A n y request for information shall be formulated with the greatest detail possible and shall specify in writing:

(a ) th e identity of the person under examination or investigation, (b ) th e period for which the information is requested,

(c ) th e nature of the information sought and the form in which the requesting Contracting Party would

prefer to receive it,

(d ) th e tax purpose for which the information is sought,

( e ) t h e reasons for believing that the information requested is foreseeably relevant to the

administration and enforcement of the tax law of the requesting Contracting Party, with respect to the person

identified in subparagraph  (a) of this paragraph,

(f ) g r o unds for believing that the information requested is held in the requested Contracting Party or

is in the possession of or obtainable by a person within the jurisdiction of the requested Contracting Party,

( g ) to the extent known, the name and address of any person believed to be in possession of the

requested information,

(h ) a s tatement that the request conforms with the laws and administrative practice of the requesting

Contracting Party and that the information would be obtainable by the requesting Contracting Party under its laws or in the normal course of administrative practice in response to a valid request made in similar circumstances from the requested Contracting Party under this Agreement,

( i)  a s tatement that the requesting Contracting Party has pursued all means available in its own

territory to obtain the information, except those that would give rise to disproportionate difficulties.

6. T h e competent authority ofthe requested Contracting Party shallacknowledge receipt of the request to the competentauthorityofthe requesting Contracting Partyand shall use its best endeavours to forward the requested information to the requesting Contracting Party with theleast reasonable delay.

Article 6

Tax Examinations Abroad

1. B y reasonable noticegiven in advance,the requesting Contracting Parties may request that the requested Contracting Party allow representatives of the competent authority of the requesting Contracting Party to enter the territory of the requested Contracting Party, to the extent permitted under its laws, to interview individuals and examine records with the prior written consent of the individuals or other persons concerned. The competent authority of the requesting Contracting Party shall notify the competent authority oftherequested Contracting Party of the time and place of the intended meeting with the individuals concerned.
2. A t the requestof the competent authority ofone Contracting Party, the competent authority of the other Contracting Party may allow representatives of the competent authority of the first-mentioned Contracting Party to be present at the appropriate part of a tax examination in the second-mentioned Contracting Party.
3. If the request referred to in paragraph 2 is acceded to, the competent authority of the Contracting Party conducting the examination shall, as soon as possible, notify the competent authority of the other Contracting Partyabout the time and placeoftheexamination,theauthority or official designated to carry out the examinationand the procedures and conditions requiredby the first-mentioned Contracting Party for the conductof the examination.All decisions with respect to the conductof the tax examination shall be madeby the Contracting Party conductingtheexamination.

Article 7

Possibility of Declining a Request

1. T h e competent authority of the requested Contracting Party may decline to assist: (a ) w h ere therequest is notmade in conformity with this Agreement;

(b ) w h ere the requesting Contracting Party has not pursued all means available in its own territory to

obtain the information, except where recourse to such means would give rise to disproportionate difficulty; or

(c ) w h ere the disclosure of the information requested would be contrary to the public policy of the

requested Contracting Party.

2. T h isAgreement shall not imposeupon a requested Contracting Party any obligation:

( a ) t o provide items subject to legal privilege, or any trade, business, industrial, commercial or

professional secret or trade process, provided that information described in paragraph 4 of Article 5 shall not by reason of that fact alone be treated as such a secret or trade process; or

( b ) t o carry out administrative measures  at  variance  with its laws  and  administrative  practices,

provided that nothing in this subparagraph shall affect the obligations of a Contracting Party under paragraph  4 of Article  5.

3. A request for information shall not be refused on the ground that the tax claimgivingrise to the request is disputed.
4. T h e requested Contracting Party shall not be required to obtain and provide information which the requesting Contracting Partywouldbe unable to obtain under its own laws or in the normalcourseof administrative practice in responseto a valid request made in similar circumstances from therequested Contracting Partyunder this Agreement.
5. T h e requested Contracting Party may decline a request for information if the information is requestedby the requesting Contracting Party to administeror enforce a provisionof the tax law ofthe requesting Contracting Party,oranyrequirementconnectedtherewith,which discriminates against a citizenof the requested Contracting Party as compared with the citizenof the requesting Contracting Party in the same circumstances.

Article 8 Confidentiality

1. A l l information provided and receivedbythecompetentauthoritiesof the Contracting Parties shallbe kept confidential.
2. S u ch information shallbe disclosed only to persons or authorities (including courts and administrative bodies) concerned with the purposes specified in Article  1, and used by such persons orauthoritiesonly for such purposes, including the determination of any appeal. For these purposes information maybe disclosed in public court proceedings orin judicial decisions.
3. S u ch information maynotbe used for anypurposeother than for the purposes stated in Article  1 without the expressed written consentof the competent authority of the requested Contracting Party.
4. T h e information provided to a requesting Contracting Party under this Agreementmay not be disclosed to any other jurisdiction.
5. P e rsonal data maybetransmitted to the extentnecessaryforcarryingout the provisions of this Agreement and subject to the provisions of the law ofthesupplying Contracting Party.

Article 9 Costs

The requesting Contracting Party shall reimburse the requested Contracting Party for all direct costs incurred in providing information pursuant to this Agreement. The respective competent authorities shall consult from time to time with regard to this Article, and in particular the competent authority of the requested Contracting Party shall consult with the competent authority of the requesting Contracting Party if the costs of providing information with respect to a specific request are expected to be significant.

Article 10

Mutual Agreement Procedure

1. W  here difficulties or doubts arise between the Contracting Parties regarding the implementation or interpretation of the Agreement,thecompetentauthoritiesshallendeavour to resolve the matter bymutual agreement.
2. I n additionto the agreements referred to in paragraph  1,thecompetent authorities ofthe Contracting Parties may mutually agreeontheprocedures to be used under Articles 5, 6 and9.
3. T h e competent authorities of the Contracting Parties may communicate with each other directly for purposes of reaching agreementunder this Article.
4. T h e Contracting Parties shallagreeonproceduresfor dispute resolution should this become necessary.

Article 11 Protocol

The attached Protocol shall be an integral part of this Agreement.

Article 12 Entry into Force

1. T h isAgreementshall enter into force one month from the date on which the Contracting Parties have notified eachother that their respective requirements for the entry into force of this Agreementhavebeen fulfilled. The relevant date shall betheday on which the last notification is received.
2. U p on the date ofentry into force, this Agreement shall have effect: (a ) fo r criminal tax matters on that date;and

(b ) fo r all other matters covered in paragraph  1 on that date, but only in respect of taxable periods

beginning on or after that date or, where there is no taxable period, all charges to tax arising on or after that date.

Article 13 Termination

1. E ither Contracting Party mayterminate the Agreementby serving a notice of termination by letter tothe competent authority oftheother Contracting Party.
2. S u ch termination shallbecome effective on the first day ofthemonth following the expiration of a period of three months after the date of receipt of notice of termination by the competent authority oftheother Contracting Party.
3. If the Agreementis terminated, the Contracting Parties shall remain bound by the provisions of Article  8

with respect to any information obtained under the Agreement.

Done at Berlin, this fourth day of July, 2008, in duplicate, in the English and German languages, each text being equally authentic.

For the Government For the Government

of Jersey of the Federal Republic of Germany

Protocol

to the Agreement

between

the Government of Jersey

and

the Government of the Federal Republic of Germany for the Exchange of Information relating to Tax Matters

The Government of Jersey and the Government of the Federal Republic of Germany have agreed at the signing of the Agreement between the two Governments for the Exchange of Information relating to Tax Matters on the following provisions which shall form an integral part of the said Agreement:

1. I n sub-paragraph  (a) ofparagraph 2 of Article  7 reference tolegal privilege shall be interpreted as t include legal privilege which is establishedby the Courtsbasedon settled caselaw.
2. W  it h respect toparagraph 5 of Article  8 the Contracting Parties shallensure the protection of personal dat at a level that is equivalent to that of Directive 95/46/EC ofthe European Parliament and of the Council of 24 October 1995on the protection of individuals with regardtothe processing ofpersonal data and on the freemovementof such data. In addition the following shall apply:

(a ) T h e receiving agency may use such data only for the stated purpose and shall be subject to the

conditions prescribed by the supplying agency; such use is also permitted, subject to the written consent required under paragraph 3 of Article  8, for the prevention and prosecution of seriou crimes and for the purpose of addressing serious threats to public security;

(b ) T h e receiving agency shall on request inform the supplying agency about the use of the supplied

data and the results achieved thereby;

(c ) P e rsonal data may be supplied only to the responsible agencies. Any subsequent supply to other

agencies may be effected only with the prior approval of the supplying agency;

(d ) T h e supplying agency shall be obliged to ensure that the data to be supplied are accurate and that

they are necessary for and proportionate to the purpose for which they are supplied. Any bans on data supply prescribed under the law of the supplying Contracting Party shall be observed. If it emerges that inaccurate data or data which should not have been supplied have been supplied, the receiving agency shall be informed of this without delay. That agency shall be obliged to correct or erase such data without delay;

(e ) U p on application the person concerned shall be informed of the supplied data relating to him and

of the use to which such data are to be put. There shall be no obligation to furnish this information if on balance it turns out that the public interest in withholding it outweighs the interest of the person concerned in receiving it. In all other respects, the right of the person concerned to be informed of the existing data relating to him shall be governed by the law of the Contracting Party in whose sovereign territory the application for the information is made;

(f ) T h e receiving agency shall bear liability in accordance with the law applicable to it in relation to

any person suffering unlawful damage in connection with the supply of data pursuant to this Agreement. In relation to the damaged person, the receiving agency may not plead in its defence that the damage had been caused by the supplying agency. If the receiving agency pays compensation for damages as a result of the use of incorrect data supplied, the supplying agency shall refund to the receiving agency the total amount of the compensation paid;

(g ) If the law applicable to the supplying agency provided, with respect to the personal data supplied,

for erasure within a certain period of time that agency shall inform the receiving agency accordingly. Irrespective of such periods, supplied personal data shall be erased once they are no longer required for the purpose for which they were supplied;

(h ) T h e supplying and the receiving agencies shall be obliged to keep official records of the supply

and receipt of personal data;

(i ) T h e supplying and the receiving agencies shall be obliged to take effective measures to protect the

personal  data  supplied against unauthorised  access, unauthorised alteration  and  unauthorised disclosure.

3. I n A rticle 9 the term"direct" costs shall be interpreted asfollows:-

(a ) ex a mples of the direct costs' include, but are not limited to, the following:-

(i ) r e a s onable costs of reproducing and transporting documents or records to the competent

authority of the requesting Contracting Party;

(i i ) r e a s onable fees imposed by a financial institution or other third Contracting Party record

keeper for copying records and research related to a specific request for information;

(i ii ) r e a so nable costs for stenographic reports and interviews, depositions or testimony;

( iv ) r e a s onable fees and expenses, determined in accordance with amounts allowed under

applicable law, on the person who voluntarily appears in Jersey or the Federal Republic of Germany for interview, deposition or testimony relating to a particular information request;

(v ) r e a so nable legal fees for non-government counsel appointed or retained, with the approval

of the competent authority of the requesting Contracting Party, for litigation in the courts of the requested Contracting Party related to a specific request for information.

( b ) D irect costs' do not include ordinary administrative and overhead expenses incurred by the

requested Contracting Party in reviewing and responding to information requests submitted by the requesting Contracting Party.

(c ) If the direct costs pertaining to a specific request are expected to exceed 500  Euros or the sterling

equivalent, the competent authority of the requested Contracting Party shall contact the competent authority of the requesting Contracting Party to determine whether the requesting Contracting Party wants to pursue the request and bear the costs.

(d ) T h e competent authorities shall consult not later than twelve months after the date the Agreement

enters into force, and upon request of either competent authority thereafter, with respect to the costs incurred or potentially to be incurred under the Agreement and with a view to minimising such costs.

4. F o r malcommunications,including requests for information,madein connection with or pursuant to the provisions of the Agreement entered into will be in writing directlyto the competent authority of the other Contracting Party at the addresses given below, or such other address as may be notified by one Contracting Partytotheother from time to time. Anysubsequentcommunicationsregardingrequests for information will be either in writing or verbally, whichever is most practical, between the earlier mentionedcompetent authorities ortheir authorised entities.

Competent Authority Competent Authority for the Federal Republic of Germany: for Jersey:

Bundeszentralamt für Steuern 53221 Bonn

In respect of criminal tax matters:

Bundesamt für Justiz 53094 Bonn

The Minister for Treasury and R e s o urces

PO Box 353

Cyril Le Marquand House The Parade

St. Helier

JE4 8UL

In respect of criminal tax matters: The above-mentioned authority.

Agreement between

the Government of Jersey and

the Government of

the Federal Republic of Germany

on Co-operation in Tax Matters

and the Avoidance of Double Taxation with respect to certain Items of Income

the Government of the Federal Republic of Germany,

Desiring to promote their mutual economic relations by removing fiscal obstacles and to strengthen their co- operation in tax matters,

Have agreed as follows:

Article 1 Persons covered

This Agreement shall apply to persons who are residents of one or both of the Contracting Parties.

Article 2 Taxes Covered

1. T h i s Agreement shall apply totaxesonincome.
2. T h e existing taxestowhich this Agreementshallapply are in particular: (a ) in the caseof the Federal RepublicofGermany:

th e in c o m  e t ax (Einkommensteuer),

th e co r p o r a ti on tax (Körperschaftsteuer) and th e tr a d e t a x (Gewerbesteuer),

in c l u d in g th e supplements levied thereon;

(b ) in the case of Jersey: th e in c o m  e t ax.

3. T h e Agreementshallapplyalsoto any identicalor substantially similar taxes that are imposed after the date ofsignatureof the Agreement in addition to,or in place of, the existing taxes. Thecompetent authorities of the Contracting Parties shall notify eachotherofanysignificant changes that have been made in their respective taxation laws.

Article 3 Income Covered

This Agreement shall apply to items of income dealt with in Articles 6 to 8.

Article 4 General Definitions

1. F o r the purposes of this Agreement,unlessthecontextotherwiserequires:

( a) " C ontracting Party" and "the other Contracting Party" mean the Government of Jersey or the

Government of the Federal Republic of Germany, as the context requires;

(b ) " F ederal Republic of Germany", when used in a geographical sense, means the area in which the

tax law of the Federal Republic of Germany is in force;

(c ) "J e rsey" when used in a geographical sense, means the Bailiwick of Jersey, including its territorial

sea;

(d ) "c o mpetent authority" means:

( i) i n th e case of the Federal Republic of Germany, the Federal Ministry of Finance or the

agency to which it has delegated its power,

(i i) i n t h e case of Jersey, the Treasury and Resources Minister or his authorised representative; (e ) "p e rson" includes an individual, a company and any other body of persons;

( f) " c ompany" means any body corporate or any entity that is treated as a body corporate for tax

purposes;

(g ) "e n terprise" applies to the carrying on of any business;

( h ) " b usiness" includes the performance of professional services and of other activities of an

independent character;

( i) " en terprise of a Contracting Party" and "enterprise of the other Contracting Party" mean

respectively an enterprise carried on by a resident of a Contracting Party or an enterprise carried on by a resident of the other Contracting Party.

2. A  s regardstheapplication of the Agreementat any time by a Contracting Party any termnot defined therein shall, unlessthecontextotherwise requires, have the meaning that ithas at that timeunder the law of that Contracting Party for the purposes ofthe taxes to whichtheAgreement applies, anymeaning underthe applicable tax laws of that Contracting Party prevailing over a meaninggiven to the term under other laws of that Contracting Party.

Article 5 Residence

1. F o r the purposesof this Agreement,theterm "resident of a Contracting Party" means any person who, under the laws of that Contracting Party, is liable to tax therein by reason of his domicile,residence,place of managementoranyother criterion of a similar nature. This term, however, does not include anyperson who is liable to tax in the territory of that Contracting Partyin respect only ofincome from sources in that Contracting Party or capital situated therein.
2. W h ere by reason of the provisions of paragraph 1 an individual is a residentof both Contracting Parties, then his status shallbedetermined as follows:

(a ) h e shall be deemed to be a resident only of the Contracting Party in which he has a permanent

home available to him; if he has a permanent home available to him in both Contracting Parties, he shall be deemed to be a resident only of the Contracting Party with which his personal and economic relations are closer (centre of vital interests);

(b ) if t he Contracting Party in which he has his centre of vital interests cannot be determined, or if he

has not a permanent home available to him in either Contracting Party, he shall be deemed to be a resident only of the Contracting Party in which he has an habitual abode;

( c ) if he has an habitual abode in both Contracting Parties or in neither of them, the competent

authorities of the Contracting Parties shall settle the question by mutual agreement.

Article 6 Pensions and Annuities

1. P  en sions and other similar remuneration in consideration of past employment or annuities paid to a resident of a Contracting Party shall be taxable only by that Contracting Party.
2. N  o twithstanding the provisionsofparagraph 1, pensions andother remuneration paid under the social security legislation of a Contracting Partyshallbe taxable only by that Contracting Party.
3. A  n y pension paid by,or out of fundscreatedby, a Contracting Party, a Land, a political subdivision or a local authority thereof or some other legal entity under public law of that Contracting Party to an individual in respect ofservicesrendered to that Contracting Party, Land, political subdivision orlocal authority orsomeotherlegal entity under public law shallbe taxable only by that Contracting Party.
4. N  o twithstanding the provisionsof paragraph  1,recurrent or non-recurrent payments madebyoneof the Contracting Parties or a political subdivision thereof to a personresidentintheother Contracting Partyas compensationfor political persecutionor for an injury ordamagesustainedas a result of war (including restitution payments)orof military or civil alternative service or of a crime, vaccination or a similar event shall be taxable only by the first-mentioned Contracting Party.
5. T h e term "annuities" means certain amountspayable periodically at stated times, for life or for a specified or ascertainable periodoftime,underan obligation tomake the payments in return for adequateand full consideration in money ormoney'sworth.

Article 7 Students

Payments which a student or business apprentice who is or was immediately before visiting a Contracting Party a resident of the other Contracting Party and who is present in the first-mentioned Contracting Party solely for the purpose of his education or training receives for the purpose of his maintenance, education or training shall not be taxed by that Contracting Party, provided that such payments arise from sources outside that Contracting Party.

Article 8 Associated Enterprises

1. W  h ere:

(a ) a n enterprise of a Contracting Party participates directly or indirectly in the management, control

or capital of an enterprise of the other Contracting Party, or

( b ) th e same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting Party and an enterprise of the other Contracting Party,

a n d i n 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. W  h ere a Contracting Party intends to adjust the profits ofan enterprise in accordance with the principles set outinparagraph 1, it shallinform the enterprise oftheintended action in good time and give it the opportunity to inform the other enterprise so as to give that other enterprise the opportunity to inform in turn the other Contracting Party. However,therightof the Contracting Party providing such information to make the proposed adjustmentshallnotbe thereby affected.

Article 9

Mutual Agreement Procedure

1. W h ere a person considers that the actions of one or both of the Contracting Parties will result for him in taxation not in accordance with the provisions of this Agreement,hemay, irrespective of the remedies provided by the law of the Contracting Party concerned, present his case to the competent authority of the Contracting Partyofwhich he is a resident. Thecasemustbepresented within three years of the first notification ofthe action resulting in taxationnotin accordance with the provisions of the Agreement.
2. T h e competent authority shall endeavour, if the objection appears to ittobe justified and if it isnot itself able toarriveat a satisfactory solution, to resolve the casebymutualagreement with the competent authority of the other Contracting Party, with a view to the avoidance of taxation which is not in accordance with theAgreement.Anyagreementreachedshallbe implemented notwithstanding any time limits inthe law of the Contracting Parties.
3. T h e competent authorities of the Contracting Parties maycommunicate with eachother directly forthe purpose ofreaching an agreement in the senseof the preceding paragraphs.
4. T h e competent authority of a Contracting Partyshallnotbe obliged to initiate the mutualagreement procedure where legal or administrative proceedings have resulted in a final ruling that by actions giving rise toan adjustment of transfers of profits under Article 8 one of the enterprisesconcernedis liable to a serious penalty.In addition, thecompetent authority of a Contracting Party shall not beobliged to initiate the mutualagreement procedure if the enterprise has not fulfilled the documentationand/or information requirements of the adjusting Contracting Party before the assessment in which the adjustment is incorporated was finalized.
5. T h e Contracting Parties mayalsoagreeonother forms of dispute resolution including arbitration.
6. T h e competentauthoritiesof the Contracting Parties maymodifyorsupplement the aboverules and procedures as necessary tomore effectively implementtheir intent.
7. I f , in carrying out the provisions of this Article,personal data shallbeexchanged, the provisions of paragraph 2 of the Protocol to the Agreementof 4 July 2008 between the Government of Jersey and th Governmentofthe Federal Republic of GermanyfortheExchangeof Information relatingtoTaxMatters shall apply.

Article 10 Entry into Force

1. T  h isAgreementshallenter into forceonemonth from the date onwhichthe Contracting Parties have notified eachother that their respective requirements for the entry into force of this Agreementhavebeen fulfilled. The relevant date shall betheday on which the last notification is received.
2. T h e provisions of this Agreement shall have effect:

(a ) in respect of taxes levied for periods beginning on or after the first day of January of the calendar

year next following that in which the Agreement entered into force,

(b ) in respect of proceedings referred to in paragraph  1 of Article  9 which are initiated after its entry

into force.

3. N  o twithstanding paragraph  1 andparagraph 2 of this Article, the Agreementshall only enter into forc when the Agreement of 4  July  2008 between the Government of Jersey and the Government of th Federal RepublicofGermany for theExchangeof Information relating to TaxMattersshallhaveeffect.

Article 11 Termination

1. T h i s Agreementisconcluded for a periodof five years. Sixmonthsbefore the expiry of that period, the Contracting Parties will meet to decide on the extension of this Agreement and any other relevant measure.
2. N  o twithstanding paragraph  1, this Agreementshallbeterminated, without need of notice of termination, on the date of termination of the Agreementof 4  July 2008between the Governmentof Jersey and th Governmentof the Federal Republic of Germany for the Exchangeof Information inTax Matters.