Ratification of the Agreement between the Government of Jersey and the Government of the UK of Great Britain and Northern Ireland for the Elimination of Double Taxation with respect to Taxes on Income and on Capital Gains and the Prevention of Tax Evasion

STATES OF JERSEY

RATIFICATION OF THE AGREEMENT BETWEEN THE GOVERNMENT OF JERSEY AND THE GOVERNMENT OF THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND FOR THE ELIMINATION OF DOUBLE TAXATION WITH RESPECT TO TAXES ON INCOME AND ON CAPITAL GAINS AND THE PREVENTION OF TAX EVASION AND AVOIDANCE

Lodged au Greffe on 3rd August 2018 by the Minister for External Relations

STATES GREFFE

2018  P.97

PROPOSITION

THE STATES are asked to decide whether they are of opinion

to ratify the Agreement between the Government of Jersey and the Government of  the  United  Kingdom  of  Great  Britain  and  Northern  Ireland  for  the Elimination of Double Taxation with respect to Taxes on Income and on Capital Gains  and  the  Prevention  of  Tax  Evasion  and  Avoidance,  as  set  out  in Appendix 1 to the attached report of the Minister for External Relations dated 24th July 2018.

MINISTER FOR EXTERNAL RELATIONS

REPORT

Jersey has had a Double Taxation Agreement ("DTA") with the United Kingdom, its major trading partner, since 1952. Given the extent of the corporate and personal links that exist between Jersey and the United Kingdom, it has been of the utmost importance that the double taxation of corporate and personal incomes has been avoided. The existence of a DTA also provides important support for the business relationships that exist between the 2 jurisdictions which are of mutual benefit. In both respects the existing Agreement, which over the years has been subject to a number of amendments, has worked satisfactorily for both parties. However, it has a major drawback in that it is not aligned with the current OECD Model DTA Convention standard.

Jersey is committed to adopting and complying with the leading OECD standards. Jersey has 12 DTAs that have entered into force, including agreements with Guernsey and the Isle of Man, that are based on the OECD Model DTA Convention. It is therefore both timely and appropriate that Jersey's DTA with the United Kingdom – its most important trading partner – is now updated in line with current international standards.

Jersey is fully committed to the OECD Base Erosion and Profit Shifting ("BEPS") programme. Jersey signed the Multi-lateral Instrument (the "MLI") in June 2017, and was one of the first 3 jurisdictions to ratify the instrument, which is seen as a key element in implementing the OECD's anti-tax-avoidance measures. In accordance with this international commitment, Jersey is expected to incorporate the MLI tax treaty provisions into all its Tax Treaties. This builds on the provisions of the OECD Model Convention, and therefore it is not possible to meet these international obligations through amendments to the old 1952 DTA.

Jersey, together with Guernsey and the Isle of Man, who are similarly faced with a need for a DTA in accord with the OECD Model Convention, agreed with the United Kingdom that a new DTA was required, and the 3 Crown Dependencies agreed to jointly negotiate with the United Kingdom.

The new DTA that has been negotiated is in accord with the OECD Model Convention in providing for the avoidance of double taxation in respect of both corporate and personal incomes including business profits, dividends, interest, royalties, income from employment and pensions. The new DTA is much clearer than the old Agreement on the provisions for the avoidance of double taxation in respect of the payment of dividends, interest, and royalties. The DTA will also make it easier for individuals to avoid double taxation where they move between Jersey and the United Kingdom, due to the inclusion, for the first time, through Article 4(3), of a clause to determine where an individual is resident.

The DTA also provides for the exchange of information on request equivalent to that provided for in the Tax Information Exchange Agreements ("TIEAs") that Jersey has signed, which includes a TIEA signed with the United Kingdom in 2009.

Throughout  the  negotiation  of  the  DTA,  Jersey  officials  consulted  with  industry representatives who, among other things, were concerned to ensure that the DTA applied to zero-tax companies. This is provided for by Article 4 and by the wording of a Protocol to the Agreement (see Appendix 1 to this report).

Article 27 of the new DTA provides for assistance in the collection of taxes. However, the process for the application of this Article is yet to be agreed, and therefore it has been agreed that the entry into effect of the Article should be delayed until a date to be specified in a future exchange of letters.

The new DTA meets the 2 key requirements referred to above. Firstly, the avoidance of double  taxation  is  of  great  importance,  given  the  close  corporate  and  individual relationships that exist between Jersey and the UK, a relationship that is expected to be further enhanced when the UK withdraws from the EU. Secondly, through the new DTA, Jersey is further emphasizing that it is fully committed to compliance with the international tax standards set by the OECD.

The Minister for External Relations, Senator I.J. Gorst , finalised the negotiation of the new DTA with the United Kingdom Government through an exchange of letters with the Financial Secretary to H.M. Treasury, which took place in London on Monday 2nd July 2018. The DTA is now being presented to the States Assembly for ratification, following which it will be published and entered into the official record.

A copy of the DTA, together with the Protocol to the Agreement, is attached as Appendix 1 to this report, and the Letters exchanged are attached as Appendix 2.

The Agreement will enter into force when the domestic procedures of both parties have been completed. It is expected that the new DTA will come into force at the beginning of 2019.

The  States,  on  8th  June  2010,  adopted  the  Taxation  (Double  Taxation)  (Jersey) Regulations 2010. The Schedule to these Regulations lists the countries with whom Double Taxation Agreements have been entered into. The necessary Order to provide for the inclusion in the Schedule of the Agreement with the United Kingdom will be made subsequent to the ratification.

The latest position in respect of the other Taxation Agreements to which Jersey is a party is attached as Appendix 3 to this report.

Financial and manpower implications

There are no expected financial or manpower implications for the States arising from the ratification and implementation of the Agreement.

24th July 2018

AGREEMENT BETWEEN THE GOVERNMENT OF JERSEY AND THE GOVERNMENT OF THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND FOR THE ELIMINATION OF DOUBLE TAXATION WITH RESPECT TO TAXES ON INCOME AND ON CAPITAL GAINS AND THE PREVENTION OF TAX EVASION AND AVOIDANCE

The Government of the United Kingdom of Great Britain and Northern Ireland and the Government of Jersey,

Desiring to further develop their economic relationship and to enhance their co-operation in tax matters,

Intending to conclude an Agreement for the elimination of double taxation with respect to taxes on income and on capital gains without creating opportunities for non- taxation or reduced taxation through tax evasion or avoidance (including through treaty- shopping arrangements aimed at obtaining reliefs provided in this Agreement for the indirect benefit of residents of third States or territories),

Have agreed as follows:

ARTICLE 1

Persons covered

1. This Agreement shall apply to persons who are residents of one or both

of the Territories.

2. For the purposes of this Agreement, income derived by or through an

entity or arrangement that is treated as wholly or partly fiscally transparent under the tax law of either Territory shall be considered to be income of a resident of a Territory but only to the extent that the same income is treated, for purposes of taxation by that Territory, as the income of a resident of that Territory.

3. This Agreement shall not affect the taxation, by a Territory, of its

residents except with respect to the benefits granted under paragraph 3 of Article 7, paragraph 2 of Article 9 and Articles 18, 19, 22, 24, and 25.

ARTICLE 2 Taxes covered

1. This Agreement shall apply to taxes on income and on capital gains

imposed on behalf of a Territory or of its political subdivisions or local authorities, irrespective of the manner in which they are levied.

2. There shall be regarded as taxes on income and on capital gains all taxes

imposed on total income, or on elements of income, including taxes on gains from the alienation of movable or immovable property.

3. The existing taxes to which the Agreement shall apply are in particular:

1. in Jersey, the income tax (hereinafter referred to as "Jersey tax"):
2. in the United Kingdom:

1. the income tax;
2. the corporation tax; and
3. the capital gains tax;

(hereinafter referred to as "United Kingdom tax").

4. The Agreement shall apply also to any identical or substantially similar

taxes that are imposed after the date of signature of the Agreement in addition to, or in place of, the existing taxes. The competent authorities of the Territories shall notify each other of any significant changes that have been made in their taxation laws.

ARTICLE 3

General definitions

1. For  the  purposes  of  this Agreement,  unless the  context  otherwise

requires:

1. the  term  "Jersey"  means  the  Bailiwick  of  Jersey,  including  the territorial sea;
2. 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;
3. the terms "a Territory" and "the other Territory" mean Jersey or the United Kingdom, as the context requires;
4. the term "person" includes an individual, a company and any other body of persons;
5. the term "company" means any body corporate or any entity that is treated as a body corporate for tax purposes;
6. the term "enterprise" applies to the carrying on of any business;
7. the  terms  "enterprise  of  a  Territory"  and  "enterprise  of  the  other Territory" mean respectively an enterprise carried on by a resident of a Territory  and  an  enterprise  carried  on  by  a  resident  of  the  other Territory;

8. the term "international traffic" means any transport by a ship or aircraft, except when the ship or aircraft is operated solely between places in a Territory and the enterprise that operates the ship or aircraft is not an enterprise of that Territory;
9. the term "competent authority" means:

1. in Jersey,  the  Minister for Treasury  and  Resources  or  his authorised representative;
2. in the United Kingdom, the Commissioners for Her Majesty's Revenue and Customs or their authorised representative;

10. the term "business" includes the performance of professional services and of other activities of an independent character; and
11. the term "pension scheme" means any scheme or other arrangement which:

1. is generally exempt from income taxation; and
2. operates to administer or provide pension or retirement benefits or  to  earn  income  for  the  benefit  of  one  or  more  such arrangements.

2. As regards the application of the Agreement at any time by a Territory,

any term not defined therein shall, unless the context otherwise requires, have the meaning that it has at that time under the law of that Territory for the purposes of the taxes to which this Agreement applies, any meaning under the applicable tax laws of that Territory prevailing over a meaning given to the term under other laws of that Territory.

ARTICLE 4 Resident

1. For the purposes of this Agreement, the term "resident of a Territory"

means any person who, under the laws of that Territory, is liable to tax therein by reason of his domicile, residence, place of management, place of incorporation or any other criterion  of  a  similar  nature,  and  also  includes  that  Territory  and  any  political subdivision or local authority thereof. This term, however, does not include any person who is liable to tax in that Territory in respect only of income or capital gains from sources in that Territory.

2. Where by reason of the provisions of paragraph 1 an individual is a

resident of both Territories, then his status shall be determined as follows:

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

2. if the Territory in which he has his centre of vital interests cannot be determined, or if he does not have a permanent home available to him in either Territory, he shall be deemed to be a resident only of the Territory in which he has an habitual abode;
3. if he has an habitual abode in both Territories or in neither of them, the competent authorities of the Territories shall settle the question by mutual agreement.

3. Where by reason of the provisions of paragraph 1 a person other than

an individual is a resident of both Territories, the competent authorities of the Territories shall endeavour to determine by mutual agreement the Territory of which such person shall be deemed to be a resident for the purposes of this Agreement, having regard to its place  of  effective  management,  the  place  where  it  is  incorporated  or  otherwise constituted and any other relevant factors. In the absence of a mutual agreement by the competent authorities of the Territories, the person shall not be considered a resident of either Territory for the purposes of claiming any benefit provided by this Agreement except those provided by Articles 22, 24 and 25.

ARTICLE 5 Permanent establishment

1. For  the  purposes  of  this  Agreement,  the  term  "permanent

establishment" means a fixed place of business through which the business of an enterprise is wholly or partly carried on.

2. The term "permanent establishment" includes especially:

1. a place of management;
2. a branch;
3. an office;
4. a factory;
5. a workshop; and
6. a mine, an oil or gas well, a quarry or any other place of extraction of natural resources.

3. A building site or construction or installation project constitutes a

permanent establishment only if it lasts more than twelve months.

4. Notwithstanding the preceding provisions of this Article, the term

"permanent establishment" shall be deemed not to include:

1. the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise;

2. the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery;
3. the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;
4. the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise, or of collecting information, for the enterprise;
5. the maintenance of a fixed place of business solely for the purpose of carrying on, for the enterprise, any other activity of a preparatory or auxiliary character;
6. the maintenance of a fixed place of business solely for any combination of activities mentioned in sub-paragraphs (a) to (e), provided that the overall  activity  of  the  fixed  place  of  business  resulting  from  this combination is of a preparatory or auxiliary character.

5. Paragraph 4 shall not apply to a fixed place of business that is used or

maintained by an enterprise if the same enterprise or a closely related enterprise carries on business activities at the same place or at another place in the same Territory and

1. that place or other place constitutes a permanent establishment for the enterprise or the closely related enterprise under the provisions of this Article, or
2. the overall activity resulting from the combination of the activities carried on by the two enterprises at the same place, or by the same enterprise or closely related enterprises at the two places, is not of a preparatory or auxiliary character,

provided that the business activities carried on by the two enterprises at the same place, or by the same enterprise or closely related enterprises at the two places, constitute complementary functions that are part of a cohesive business operation.

6. For the purposes of paragraph 5, a person or enterprise is closely related

to an enterprise if, based on all the relevant facts and circumstances, one has control of the other or both are under the control of the same persons or enterprises. In any case, a person or enterprise shall be considered to be closely related to an enterprise if one possesses directly or indirectly more than 50 per cent of the beneficial interest in the other (or, in the case of a company, more than 50 per cent of the aggregate vote and value of the company's shares or of the beneficial equity interest in the company) or if another person or enterprise possesses directly or indirectly more than 50 per cent of the beneficial interest (or, in the case of a company, more than 50 per cent of the aggregate vote and value of the company's shares or of the beneficial equity interest in the company) in the person and the enterprise or in the two enterprises.

7. Notwithstanding  the  provisions  of  paragraphs 1  and  2,  where  a

person – other than an agent of an independent status to whom paragraph 8 applies – is acting on behalf of an enterprise and has, and habitually exercises, in a Territory an authority to conclude contracts on behalf of the enterprise, that enterprise shall be deemed to have a permanent establishment in that Territory in respect of any activities

which that person undertakes for the enterprise, unless the activities of such person are limited to those mentioned in paragraph 4 which, if exercised through a fixed place of business, would not make this fixed place of business a permanent establishment under the provisions of that paragraph.

8. An enterprise shall not be deemed to have a permanent establishment

in a Territory merely because it carries on business in that Territory through a broker, general commission agent or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business.

9. The fact that a company which is a resident of a Territory controls or is

controlled by a company which is a resident of the other Territory, or which carries on business  in  that  other  Territory  (whether  through  a  permanent  establishment  or otherwise), shall not of itself constitute either company a permanent establishment of the other.

ARTICLE 6

Income from immovable property

1. Income derived by a resident of a Territory 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 paragraph 1 shall apply to income derived from the

direct use, letting, or use in any other form of immovable property.

4. The provisions of paragraphs 1 and 3 shall also apply to the income

from immovable property of an enterprise.

ARTICLE 7 Business profits

1. Profits of an enterprise of a Territory shall be taxable only in that

Territory unless the enterprise carries on business in the other Territory through a permanent  establishment  situated  therein.  If  the  enterprise  carries  on  business  as aforesaid, the profits that are attributable to the permanent establishment in accordance with the provisions of paragraph 2 may be taxed in that other Territory.

2. For the purposes of this Article and Article 22, the profits that are

attributable in each Territory to the permanent establishment referred to in paragraph 1 are the profits it might be expected to make, in particular in its dealings with other parts

of the enterprise, if it were a separate and independent enterprise engaged in the same or similar activities under the same or similar conditions, taking into account the functions performed, assets used and risks assumed by the enterprise through the permanent establishment and through the other parts of the enterprise.

3. Where, in accordance with paragraph 2, a Territory adjusts the profits

that are attributable  to a permanent establishment of an  enterprise of one  of the Territories and taxes accordingly profits of the enterprise that have been charged to tax in the other Territory, the other Territory shall, to the extent necessary to eliminate double taxation on these profits, make an appropriate adjustment to the amount of the tax charged on those profits. In determining such adjustment, the competent authorities of the Territories shall if necessary consult each other.

4. Where profits include items of income or capital gains which are dealt

with separately in other Articles of this Agreement, then the provisions of those Articles shall not be affected by the provisions of this Article.

ARTICLE 8 International shipping and air transport

1. Profits of an enterprise of a Territory from the operation of ships or

aircraft in international traffic shall be taxable only in that Territory.

2. For the purposes of this Article, profits from the operation of ships or

aircraft in international traffic include:

1. profits from the rental on a bareboat basis of ships or aircraft; and
2. profits from the use, maintenance or rental of containers (including trailers and related equipment for the transport of containers) used for the transport of goods or merchandise;

where such rental or such use, maintenance or rental, as the case may be, is incidental to the operation of ships or aircraft in international traffic.

3. The provisions of paragraph 1 shall also apply to profits from the

participation in a pool, a joint business or an international operating agency.

ARTICLE 9 Associated enterprises

1. Where:

1. an enterprise of a Territory participates directly or indirectly in the management, control or capital of an enterprise of the other Territory, or
2. the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Territory 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  a  Territory 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 Agreement and the competent authorities of the Territories shall if necessary consult each other.

ARTICLE 10 Dividends

1. Dividends paid by a company which is a resident of a Territory to a

resident of the other Territory may be taxed in that other Territory.

2. However,  dividends  paid by  a  company  which  is  a  resident  of  a

Territory may also be taxed in that Territory and according to the laws of that Territory, but if the beneficial owner of the dividends is a resident of the other Territory:

1. except  as  provided  in  sub-paragraph (b),  such  dividends  shall  be exempt from tax in the Territory of which the company paying the dividends is a resident;
2. where dividends are paid out of income (including gains) derived directly or indirectly from immovable property within the meaning of Article 6  by  an  investment  vehicle  which  distributes  most  of  this income annually and whose income from such immovable property is exempted from tax, the tax charged by the Territory of which the company paying the dividends is a resident shall not exceed 15 per cent of the gross amount of the dividends other than where the beneficial owner of the dividends is a pension scheme established in the other Territory, where the exemption provided in sub-paragraph (a) shall apply.

This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid.

3. The term "dividends" as used in this Article means income from shares,

or other rights, not being debt-claims, participating in profits, as well as any other item which is treated as income from shares by the taxation laws of the Territory of which the company making the distribution is a resident.

4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial

owner of the dividends, being a resident of a Territory, carries on business in the other Territory of which the company paying the dividends is a resident through a permanent establishment situated therein and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment. In such case the provisions of Article 7 shall apply.

5. Where a company which is a resident of a Territory derives profits or

income from the other Territory, that other Territory may not impose any tax on the dividends paid by the company, except insofar as such dividends are paid to a resident of that other Territory or insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment situated in that other Territory, nor subject the company's undistributed profits to a tax on undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in that other Territory.

ARTICLE 11 Interest

1. Interest arising in a Territory and beneficially owned by a resident of

the other Territory may be taxed in that other Territory.

2. However, interest arising in a Territory may also be taxed in that

Territory according to the laws of that Territory, but if the beneficial owner of the interest is a resident of the other Territory and at least one of the conditions mentioned in paragraph 3 is met, that interest shall be taxable only in that other Territory.

3. The conditions mentioned in paragraph 2 are that:

1. the interest is beneficially owned by:

1. that other Territory itself, one of its political subdivisions, local authorities, its Central Bank, or its statutory bodies;
2. an individual;
3. a  company  in  whose  principal  class  of  shares  there  is substantial and regular trading on a recognised stock exchange;
4. a company less than 25 per cent of whose shares or other rights are  owned,  directly  or  indirectly,  by  persons  who are  not residents of that other Territory;
5. a pension scheme;
6. a bank or building society;
7. any other financial institution unrelated to and dealing wholly independently  with  the  payer;  (the  term  "other  financial institution" here means an enterprise substantially deriving its profits by raising debt finance in the financial markets or by

taking deposits at interest and using those funds in carrying on a business of providing finance); or

(viii)  any other person provided that the competent authority of the

Territory which has to grant the benefits determines that the establishment, acquisition or maintenance of that person, or the conduct of its operations, does not have as its principal purpose or one of its principal purposes to secure the benefits of this Article; or

2. the interest is paid by a Territory, one of its political subdivisions, local authorities or statutory bodies.

4. For  the  purposes  of  paragraph 3(a)(i),  the  term  "statutory  bodies"

includes  any  institution  wholly  or  mainly  owned  directly  or  indirectly  by  the Government of either Territory as may be agreed from time to time by exchange of letters between the competent authorities of the Territories.

5. The term "interest" as used in this Article means income from debt-

claims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor's profits, and in particular, income from government securities and income from bonds or debentures. The term shall not include any item which is treated as a dividend under the provisions of Article 10.

6. The provisions of paragraph 1 and 2 shall not apply if the beneficial

owner of the interest, being a resident of a Territory, carries on business in the other Territory in which the interest arises, through a permanent establishment situated therein, and the debt-claim in respect of which the  interest is paid is effectively connected with such permanent establishment. In such case the provisions of Article 7 shall apply.

7. Interest shall be deemed to arise in a Territory when the payer is a

resident of that Territory. Where, however, the person paying the interest, whether he is a resident of a Territory or not, has in a Territory a permanent establishment in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment, then such interest shall be deemed to arise in the Territory in which the permanent establishment is situated.

8. Where, by reason of a special relationship between the payer and the

beneficial owner or between both of them and some other person, the amount of the interest paid exceeds, for whatever reason, the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Territory, due regard being had to the other provisions of this Agreement.

ARTICLE 12 Royalties

1. Royalties arising in a Territory and beneficially owned by a resident of

the other Territory may be taxed in that other Territory.

2. However, royalties arising in a Territory may also be taxed in that

Territory according to the laws of that Territory, but if the beneficial owner of the royalties is a resident of the other Territory and at least one of the conditions mentioned in paragraph 3 is met, those royalties shall be taxable only in that other Territory.

3. The conditions mentioned in paragraph 2 are that the royalties are

beneficially owned by:

1. that  other  Territory  itself,  one  of  its  political  subdivisions,  local governments, local authorities, or its statutory bodies;
2. an individual;
3. a company in whose principal class of shares there is substantial and regular trading on a recognised stock exchange;
4. a company less than 25 per cent of whose shares or other rights are owned, directly or indirectly, by persons who are not residents of that other Territory; or
5. any other person provided that the competent authority of the Territory which has to grant the benefits determines that the establishment, acquisition  or  maintenance  of  that  person,  or  the  conduct  of  its operations, does not have as its principal purpose or one of its principal purposes to secure the benefits of this Article.

4. For the purposes of paragraph 3(a), the term "statutory bodies" includes

any institution wholly or mainly owned directly or indirectly by the Government of either Territory as may be agreed from time to time by exchange of letters between the competent authorities of the Territories.

5. The term "royalties" as used in this Article means payments of any kind

received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work including cinematograph films, any patent, trade mark, design or model, plan, secret formula or process, or for information (know-how) concerning industrial, commercial or scientific experience.

6. The provisions of paragraph 1 shall not apply if the beneficial owner of

the royalties, being a resident of a Territory, carries on business in the other Territory in which the royalties arise through a permanent establishment situated therein and the right or property in respect of which the royalties are paid is effectively connected with such permanent establishment. In such case the provisions of Article 7 shall apply.

7. Royalties shall be deemed to arise in a Territory when the payer is a

resident of that Territory. Where, however, the person paying the royalties, whether he is a resident of a Territory or not, has in a Territory a permanent establishment in

connection with which the liability to pay the royalties was incurred, and such royalties are borne by such permanent establishment, then such royalties shall be deemed to arise in the Territory in which the permanent establishment is situated.

8. Where, by reason of a special relationship between the payer and the

beneficial owner or between both of them and some other person, the amount of the royalties paid exceeds, for whatever reason, the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Territory, due regard being had to the other provisions of this Agreement.

ARTICLE 13 Capital gains

1. Gains  derived  by a  resident of a Territory from the  alienation of

immovable property referred to in Article 6 and situated in the other Territory may be taxed in that other Territory.

2. Gains derived by a resident of a Territory from the alienation of shares,

other than shares in which there is substantial and regular trading on a recognised stock exchange, or comparable interests, 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.

3. Gains from the alienation of movable property forming part of the

business property of a permanent establishment which an enterprise of a Territory has in the other Territory, including such gains from the alienation of such a permanent establishment (alone or with the whole enterprise), may be taxed in that other Territory.

4. Gains that an enterprise of a Territory that operates ships or aircraft in

international traffic derives from the alienation of such ships or aircraft, or from movable property pertaining to the operation of such ships or aircraft, shall be taxable only in that Territory.

5. Gains from the alienation of any property other than that referred to in

paragraphs 1, 2, 3 and 4 shall be taxable only in the Territory of which the alienator is a resident.

ARTICLE 14 Income from employment

1. Subject to the provisions of Articles 15, 17, and 18, salaries, wages and

other  similar  remuneration  derived  by  a  resident  of  a  Territory  in  respect  of  an employment shall be taxable only in that Territory unless the employment is exercised in the other Territory. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other Territory.

2. Notwithstanding the provisions of paragraph 1, remuneration derived

by a resident of a Territory in respect of an employment exercised in the other Territory shall be taxable only in the first-mentioned Territory if:

1. the recipient is present in the other Territory for a period or periods not exceeding  in  the  aggregate  183 days  in  any  twelve  month  period commencing or ending in the fiscal year concerned; and
2. the remuneration is paid by, or on behalf of, an employer who is not a resident of the other Territory; and
3. the remuneration is not borne by a permanent establishment which the employer has in the other Territory.

3. Notwithstanding the preceding provisions of this Article, remuneration

derived by a resident of a Territory in respect of an employment exercised aboard a ship or aircraft operated in international traffic (other than aboard a ship or aircraft operated solely within the other Territory) shall be taxable only in that Territory.

ARTICLE 15 Directors' fees

Directors' fees and other similar payments derived by a resident of a Territory in his capacity as a member of the board of directors of a company which is a resident of the other Territory may be taxed in that other Territory.

ARTICLE 16 Artistes and sportsmen

1. Notwithstanding the provisions of Article 14, income derived by a

resident of a Territory as an entertainer, such as a theatre, motion picture, radio or television artiste, or a musician, or as a sportsman, from his personal activities as such exercised in the other Territory, may be taxed in that other Territory.

2. Where  income  in  respect  of  personal  activities  exercised  by  an

entertainer or a sportsman in his capacity as such accrues not to the entertainer or sportsman  himself  but  to  another  person,  that  income  may,  notwithstanding  the provisions of Articles 7 and 14, be taxed in the Territory in which the activities of the entertainer or sportsman are exercised.

ARTICLE 17 Pensions

Subject to the provisions of Article 18, 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.

Government service

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 purposes 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.

ARTICLE 19 Students

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

ARTICLE 20 Other income

1. Items  of  income  beneficially  owned  by  a  resident  of  a  Territory,

wherever arising, not dealt with in the foregoing Articles of this Agreement shall be taxable only in that Territory.

2. Notwithstanding the provisions of paragraph 1, where an amount of

income is paid to a resident of a Territory out of income received by trustees, or by personal  representatives  administering  the  estates  of  deceased  persons,  and  those trustees or personal representatives are residents of the other Territory, that amount shall be treated as arising from the same sources, and in the same proportions, as the income received by the trustees or personal representatives out of which that amount is paid.

Any tax paid by the trustees or personal representatives in respect of the income paid to the beneficiary shall be treated as if it had been paid by the beneficiary.

3. The provisions of paragraph 1 shall not apply to income, other than

income from immovable property as defined in paragraph 2 of Article 6, if the beneficial owner of such income, being a resident of a Territory, carries on business in the other Territory through a permanent establishment situated therein and the right or property in respect of which the income is paid is effectively connected with such permanent establishment. In such case the provisions of Article 7 shall apply.

4. Where, by reason of a special relationship between the resident referred

to in paragraph 1 and some other person, or between both of them and some third person, the amount of the income referred to in that paragraph exceeds the amount (if any) which would have been agreed upon between them in the absence of such a relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such a case, the excess part of the income shall remain taxable according to the laws of each Territory, due regard being had to the other applicable provisions of this Agreement.

ARTICLE 21

Miscellaneous rules applicable to certain offshore activities

1. The provisions of this Article shall apply notwithstanding any other

provision of this Agreement.

2. In this Article the term "offshore activities" means activities which are

carried on offshore in a Territory in connection with the exploration or exploitation of the seabed and subsoil and their natural resources situated in that Territory.

3. An enterprise of a Territory which carries on offshore activities in the

other Territory shall, subject to paragraphs 4 and 5 be deemed to be carrying on business in that other Territory through a permanent establishment situated therein.

4. The  provisions  of  paragraph 3  shall  not apply  where  the  offshore

activities are carried on in the other Territory for a period or periods not exceeding in the aggregate 30 days in any twelve month period beginning or ending in the fiscal year concerned. For the purposes of this paragraph:

1. where an enterprise of a Territory carrying on offshore activities in the other  Territory  is  associated  with  another  enterprise  carrying  on substantially similar offshore activities there, the former enterprise shall be deemed to be carrying on all such activities of the latter enterprise, with the exception of activities which are carried on at the same time as its own activities;
2. an enterprise shall be regarded as associated with another enterprise if one participates directly or indirectly in the management, control or capital of the other or if the same person or persons participate directly or indirectly in the management, control or capital of both enterprises.

5. Profits derived by a resident of a Territory from:

1. the transportation, in connection with offshore activities, of supplies or personnel by ship or aircraft to or between places where such activities are being carried on; or
2. the operation of ships for towing or anchor handling in connection with such activities;

shall be taxable only in that Territory.

6. Income  derived  by  a  resident  of  a  Territory  from  exploration  or

exploitation rights and gains derived by a resident of a Territory from the alienation of such rights or from the alienation of:

1. property situated in the other Territory and used in connection with offshore activities carried on in that other Territory; or
2. shares deriving their value or the greater part of their value directly or indirectly from such rights or such property or from such rights and such property taken together;

may be taxed in that other Territory. In this paragraph "exploration or exploitation rights" means rights to assets to be produced by the exploration or exploitation of the seabed and subsoil and their natural resources in the other Territory, including rights to interests in or to the benefit of such assets.

7. Subject to paragraph 8 of this  Article, salaries,  wages and similar

remuneration derived by a resident of one of the Territories from an employment connected with offshore activities in the other Territory may, to the extent that the duties are performed offshore in that other territory, be taxed in that other territory.

8. Salaries, wages and similar remuneration derived by a resident of one

of the Territories from an employment exercised aboard a ship or aircraft undertaking transportation referred to in paragraph 5(a), or aboard a ship undertaking operations referred to in paragraph 5(b), of this Article shall be taxable only in the Territory of which the employee is a resident.

ARTICLE 22

Elimination of double taxation

1. In the case of Jersey, double taxation shall be avoided as follows:

1. When imposing tax on its residents, Jersey may include in the basis upon  which  such  taxes  are  imposed  the  items  of  income,  which, according to the provisions of this Agreement, may be taxed in the United Kingdom;
2. Where a resident of Jersey derives income which, in accordance with the provisions of this Agreement, may be taxed in the United Kingdom, Jersey shall allow as a deduction from the tax on the income of that resident,  an  amount  equal  to  the  income  tax  paid  in  the  United Kingdom. Such deduction shall not, however, exceed that part of the income  tax,  as computed  before  the  deduction is  given,  which  is attributable to the income which may be taxed in the United Kingdom.

2. 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 or, as the case may be, regarding the exemption from United Kingdom tax of a dividend arising in a territory outside the United Kingdom or of the profits of a permanent establishment situated in a territory outside the United Kingdom (which shall not affect the general principle hereof):

1. Jersey tax payable under the laws of Jersey and in accordance with this Agreement, whether directly or by deduction, on profits, income or chargeable gains from sources within Jersey (excluding in the case of a dividend tax payable in respect of the profits out of which the dividend is paid) shall be allowed as a credit against any United Kingdom tax computed by reference to the same profits, income or chargeable gains by reference to which the Jersey tax is computed;
2. a dividend which is paid by a company which is a resident of Jersey to a  company  which  is  a  resident  of  the  United  Kingdom  shall  be exempted from United Kingdom tax when the exemption is applicable and the conditions for exemption under the law of the United Kingdom are met;
3. the profits of a permanent establishment in Jersey of a company which is a resident of the United Kingdom shall be exempted from United Kingdom tax when the exemption is applicable and the conditions for exemption under the law of the United Kingdom are met;
4. in  the  case  of  a  dividend  not  exempted  from  tax  under  sub- paragraph (b) above which is paid by a company which is a resident of Jersey to a company which is a resident of the United Kingdom and which controls directly or indirectly at least 10 per cent of the voting power in the company paying the dividend, the credit mentioned in sub- paragraph (a) above shall also take into account the Jersey tax payable by the company in respect of its profits out of which such dividend is paid.

3. For the purposes of paragraphs 1 and 2, profits, income and chargeable

gains owned by a resident of one of the Territories which may be taxed in the other Territory in accordance with this Agreement shall be deemed to arise from sources in that other Territory.

4. The  provisions  of  paragraph 1  shall  not  apply  where  the  United

Kingdom tax payable is in accordance with the Agreement solely because the profits, income or chargeable gains referred to in that paragraph are also profits, income or chargeable gains derived by a resident of the United Kingdom.

5. The provisions of paragraph 2 of this Article shall not apply where the

Jersey tax payable is in accordance with the Agreement solely because the profits, income or chargeable gains referred to in that paragraph are also profits, income or chargeable gains derived by a resident of Jersey.

ARTICLE 23 Entitlement to benefits

1. Notwithstanding the other provisions of this Agreement, a benefit under

this Agreement shall not be granted in respect of an item of income or capital gain if it is reasonable to conclude, having regard to all relevant facts and circumstances, that obtaining  that  benefit  was  one  of  the  principal  purposes  of  any  arrangement  or transaction that resulted directly or indirectly in that benefit, unless it is established that

granting that benefit in these circumstances would be in accordance with the object and purpose of the relevant provisions of this Agreement.

2. Where a benefit under this Agreement is denied to a person under

paragraph 1, the competent authority of the Territory that would otherwise have granted this benefit shall nevertheless treat that person as being entitled to this benefit, or to different benefits with respect to a specific item of income or a capital gain, if such competent authority, upon request from that person and after consideration of the relevant facts and circumstances, determines that such benefits would have been granted to that person in the absence of the transaction or arrangement referred to in paragraph 1. The competent authority of the territory to which the request has been made will consult with the competent authority of the other Territory before rejecting a request made under this paragraph by a resident of that other Territory.

ARTICLE 24 Non-discrimination

1. A legal person, partnership or association deriving its status as such

from the laws in force in a Territory shall not be subjected in the other Territory to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which a legal person, partnership or association of that other Territory in the same circumstances, in particular with respect to residence, is or may be subjected.

2. The taxation on a permanent establishment which an enterprise of a

Territory has in the other Territory shall not be less favourably levied in that other Territory than the taxation levied on enterprises of that other Territory carrying on the same activities.

3. Except where the provisions of paragraph 1 of Article 9, paragraph 8 of

Article 11, paragraph 8 of Article 12, paragraph 4 of Article 20, or Article 23 apply, interest, royalties and other disbursements paid by an enterprise of a Territory to a resident of the other Territory shall, for the purpose of determining the taxable profits of such enterprise, be deductible under the same conditions as if they had been paid to a resident of the first-mentioned Territory.

4. Enterprises of a Territory, the capital of which is wholly or partly

owned or controlled, directly or indirectly, by one or more residents of the other Territory, shall not be subjected in the first-mentioned Territory to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which other similar enterprises of the first-mentioned Territory are or may be subjected.

5. Nothing contained in this Article shall be construed as obliging either

Territory to grant to individuals not resident in that Territory any of the personal allowances, reliefs and reductions for tax purposes which are granted to individuals so resident or in the case of the United Kingdom to its nationals.

Mutual agreement procedure

1. Where  a  person  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 Agreement, he may, irrespective of the remedies provided by the domestic law of those Territories, present his case to the competent authority of either Territory. 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 the Agreement.

2. The competent 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 competent authority of the other Territory, with a view to the avoidance of taxation which is not in accordance with this Agreement. Any agreement  reached  shall  be  implemented  notwithstanding  any  time  limits  in  the domestic law of the Territories.

3. The competent authorities of the Territories shall endeavour to resolve

by mutual agreement any difficulties or doubts arising as to the interpretation or application of this Agreement. They may also consult together for the elimination of double taxation in cases not provided for in the Agreement.

4. The competent authorities of the Territories may communicate with

each other directly for the purpose of reaching an agreement in the sense of the preceding paragraphs.

5. Where:

1. under paragraph 1, a person has presented a case to the competent authority of a Territory on the basis that the actions of one or both of the  Territories  have  resulted  for  that  person  in  taxation  not  in accordance with the provisions of this Agreement; and
2. the competent authorities are unable to reach an agreement to resolve that  case  pursuant  to  paragraph 2  within  two  years  from  the presentation  of  the  case  to  the  competent  authority  of  the  other Territory;

any unresolved issues arising from the case shall be submitted to arbitration if the person so requests. These unresolved issues shall not, however, be submitted to arbitration if a decision on these issues has already been rendered by a court or administrative tribunal of either Territory. Unless a person directly affected by the case does not accept the mutual  agreement  that  implements  the  arbitration  decision,  that  decision  shall  be binding on both Territories and shall be implemented notwithstanding any time limits in the domestic laws of these Territories. The competent authorities of the Territories shall by mutual agreement settle the mode of application of this paragraph.

Exchange of information

1. The  competent  authorities  of  the  Territories  shall  exchange  such

information as is foreseeably relevant for carrying out the provisions of this Agreement or to the administration or enforcement of domestic laws concerning taxes of every kind and description imposed on behalf of the Territories, or of their political subdivisions or local authorities, insofar as the taxation thereunder is not contrary to the Agreement. The exchange of information is not restricted by Articles 1 and 2.

2. Any information received under paragraph 1 by a Territory shall be

treated as secret in the same manner as information obtained under the domestic laws of that Territory and shall be disclosed only to persons or authorities (including courts and  administrative  bodies)  concerned  with  the  assessment  or  collection  of,  the enforcement or prosecution in respect of, the determination of appeals in relation to, the taxes  referred  to  in  paragraph 1,  or  the  oversight  of  the  above.  Such  persons  or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions. Notwithstanding the foregoing, information received by a Territory may be used for other purposes when such information may be used for such other purposes under the laws of both Territories and the competent authority of the supplying Territory authorises such use.

3. In no case shall the provisions of paragraphs 1 and 2 be construed so as

to impose on a Territory the obligation:

1. to carry out administrative measures at variance with the laws and administrative practice of that or of the other Territory;
2. to supply information which is not obtainable under the laws or in the normal course of the administration of that or of the other Territory;
3. to  supply  information  which  would  disclose  any  trade,  business, industrial,  commercial  or  professional  secret  or  trade  process,  or information the disclosure of which would be contrary to public policy.

4. If information is requested by a Territory in accordance with this

Article, the other Territory shall use its information gathering measures to obtain the requested information, even though that other Territory may not need such information for its own tax purposes. The obligation contained in the preceding sentence is subject to the limitations of paragraph 3 but in no case shall such limitations be construed to permit a Territory to decline to supply information solely because it has no domestic interest in such information.

5. In no case shall the provisions of paragraph 3 be construed to permit a

Territory to decline to supply information solely because the information is held by a bank, other financial institution, nominee or person acting in an agency or a fiduciary capacity or because it relates to ownership interests in a person.

Assistance in the collection of taxes

1. The Territories shall lend assistance to each other in the collection of

revenue claims. This assistance is not restricted by Articles 1 and 2. The competent authorities of the Territories may by mutual agreement settle the mode of application of this Article.

2. The term "revenue claim" as used in this Article means an amount owed

in respect of taxes of every kind and description imposed on behalf of the Territories, or of their political subdivisions or local authorities, insofar as the taxation thereunder is not contrary to this Agreement or any other instrument to which the Territories are parties,  as  well  as  interest,  administrative  penalties  and  costs  of  collection  or conservancy related to such amount.

3. When a revenue claim of a Territory is enforceable under the laws of

that Territory and is owed by a person who, at that time, cannot, under the laws of that Territory, prevent its collection, that revenue claim shall, at the request of the competent authority of that Territory, be accepted for purposes of collection by the competent authority of the other Territory. That revenue claim shall be collected by that other Territory in accordance with the provisions of its laws applicable to the enforcement and collection of its own taxes as if the revenue claim were a revenue claim of that other Territory.

4. When a revenue claim of a Territory is a claim in respect of which that

Territory may, under its law, take measures of conservancy with a view to ensure its collection, that revenue claim shall, at the request of the competent authority of that Territory, be accepted for purposes of taking measures of conservancy by the competent authority of the other Territory. That other Territory shall take measures of conservancy in respect of that revenue claim in accordance with the provisions of its laws as if the revenue claim were a revenue claim of that other Territory even if, at the time when such measures are applied, the revenue claim is not enforceable in the first-mentioned Territory or is owed by a person who has a right to prevent its collection.

5. Notwithstanding the provisions of paragraphs 3 and 4, a revenue claim

accepted by a Territory for purposes of paragraph 3 or 4 shall not, in that Territory, be subject to the time limits or accorded any priority applicable to a revenue claim under the laws of that Territory by reason of its nature as such. In addition, a revenue claim accepted by a Territory for the purposes of paragraph 3 or 4 shall not, in that Territory, have any priority applicable to that revenue claim under the laws of the other Territory.

6. Proceedings with respect to the existence, validity or the amount of a

revenue claim of a Territory shall not be brought before the courts or administrative bodies of the other Territory.

7. Where, at any time after a request has been made by a Territory under

paragraph 3 or 4 and before the other Territory has collected and remitted the relevant revenue claim to the first-mentioned Territory, the relevant revenue claim ceases to be:

1. in the case of a request under paragraph 3, a revenue claim of the first- mentioned Territory that is enforceable under the laws of that Territory and is owed by a person who, at that time, cannot, under the laws of that Territory, prevent its collection; or
2. in the case of a request under paragraph 4, a revenue claim of the first- mentioned Territory in respect of which that Territory may, under its laws, take measures of conservancy with a view to ensure its collection;

the competent authority of the first-mentioned Territory shall promptly notify the competent authority of the other Territory of that fact and, at the option of the other Territory, the first-mentioned Territory shall either suspend or withdraw its request.

8. In no case shall the provisions of this Article be construed so as to

impose on a Territory the obligation:

1. to carry out administrative measures at variance with the laws and administrative practice of that or of the other Territory;
2. to carry out measures which would be contrary to public policy;
3. to  provide  assistance  if  the  other  Territory  has  not  pursued  all reasonable measures of collection or conservancy, as the case may be, available under its laws or administrative practice;
4. to provide assistance in those cases where the administrative burden for that Territory is clearly disproportionate to the benefit to be derived by the other Territory;
5. to provide assistance if that Territory considers that the taxes with respect  to  which  assistance  is  requested  are  imposed  contrary  to generally accepted taxation principles.

ARTICLE 28 Entry into force

1. Each  of  the  Territories  shall  notify  the  other  in  writing  of  the

completion of the procedures required by its law for the bringing into force of this Agreement. This Agreement shall enter into force on the date of the later of these notifications and shall thereupon have effect:

1. in Jersey:

1. in respect of taxes withheld at source, for amounts paid or credited on or after the first day of the second month next following the date on which this Agreement enters into force;
2. in respect of income tax, for any year of assessment beginning on or after 1st January next following the date on which this Agreement enters into force;

2. in the United Kingdom:

1. in respect of taxes withheld at source, for amounts paid or credited on or after the first day of the second month next following the date on which this Agreement enters into force;
2. in respect of income tax and capital gains tax, for any year of assessment beginning on or after 6th April next following the date on which this Agreement enters into force;
3. in respect of corporation tax, for any financial year beginning on or after 1st April next following the date on which this Agreement enters into force.

2. Notwithstanding the provisions of paragraph 1:

1. the  provisions  of  Article 25  (Mutual  agreement  procedure)  and Article 26 (Exchange of information) shall have effect from the date of entry into force of this Agreement, without regard to the taxable period to which the matter relates; and
2. the provisions of Article 27 (Assistance in the collection of taxes) shall have effect from the date specified in an exchange of letters, without regard to the taxable period to which the matter relates.

3. The 1955 Arrangement between Jersey and the United Kingdom of

Great Britain and Northern Ireland for the avoidance of double taxation with respect to taxes on income, as amended, shall cease to have effect in respect of relief from any tax with effect from the date upon which this Agreement has effect in respect of that tax in accordance with the provisions of paragraph 1 of this Article and shall terminate on the last such date.

ARTICLE 29 Termination

This Agreement shall remain in force until terminated by one of the Territories. Either  Territory  may  terminate  this  Agreement,  by  giving  notice  in  writing  of termination at least six months before the end of any calendar year beginning after the expiry of five years from the date of entry into force of this Agreement. In such event, this Agreement shall cease to have effect:

1. in Jersey:

1. in respect of taxes withheld at source, for amounts paid or credited after the date that is six months after the date on which the notice is given;
2. in respect of income tax, for any year of assessment beginning on or after 1st January next following the date on which the notice is given;

2. in the United Kingdom:

1. in respect of taxes withheld at source, for amounts paid or credited after the date that is six months after the date on which the notice is given;
2. in respect of income tax and capital gains tax, for any year of assessment beginning on or after 6th April next following the date on which the notice is given;
3. in respect of corporation tax, for any financial year beginning on or after 1st April next following the date on which the notice is given.

PROTOCOL

The Government of the United Kingdom of Great Britain and Northern Ireland and the Government of Jersey have agreed upon the following provisions which shall form an integral part of the Agreement between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of Jersey for the Elimination of Double Taxation with respect to Taxes on Income and on Capital Gains and the Prevention of Tax Evasion and Avoidance ("the Agreement").

1. In relation to the whole Agreement:

The  Territories  acknowledge  that  the  United  Kingdom  continues  to  be responsible for the international relations of Jersey in international law. This Agreement  cannot  therefore  create  obligations  which  are  binding  under international  law  and  is  not  intended  to  alter  or  affect  the  constitutional relationship between Jersey and the United Kingdom.

It is understood that both Territories will apply this Agreement in the light of the Commentaries on the OECD Model Tax Convention as they may read from time to time, having regard to any observations or other positions that they may have expressed thereon.

2. In relation to Article 4:

It is understood that the term "liable to tax" in paragraph 1 will be interpreted by the Territories in accordance with the principles set out in paragraph 8.6 of the Commentary on Article 4 of the OECD Model Tax Convention as it read on 15 July 2014.

3. In relation to Articles 11, 12 and 13:

It is understood that the term "recognised stock exchange" means:

1. the London Stock Exchange (including the Alternative  Investment Market);
2. the International Stock Exchange;
3. any of the stock exchanges in the member States of the European Union;
4. the Australian Securities Exchange, the Toronto Stock Exchange, the Stock Exchange of Hong Kong Limited, the Tokyo Stock Exchange, the  Oslo  Stock  Exchange  (Oslo  Bors),  the  Singapore  Exchange Limited, the JSE Limited (formerly the Johannesburg Stock Exchange), the SIX Swiss Exchange, or the NASDAQ system and any stock exchange in the United States of America which is registered with the US  Securities  and  Exchange  Commission  as  a  national  securities exchange under the US Securities and Exchange Act of 1934, the Stock Exchange of Mauritius; and
5. any other stock exchange agreed upon by the competent authorities of the Territories.

APPENDIX 2

STATES OF JERSEY

1. TAX INFORMATION EXCHANGE AGREEMENTS (TIEAs)

1. TIEAs signed (Note: dates in brackets are current best estimates)

+ Note: the delay in ratification arose because, subsequent to the TIEA being signed with Spain, an amendment was required to insert a missing word. This has now been agreed through an exchange of letters with the Spanish authorities, and ratification is proceeding.

2. TIEAs where  negotiations are well advanced with a draft Agreement exchanged:

• Bulgaria
• Kenya
• Lithuania
• Slovakia.

Note:  Bulgaria, Lithuania and Slovakia have signed and entered into force the

Multilateral  Convention  on  Mutual  Administrative  Assistance  in  Tax Matters. Kenya is a signatory to the Convention and it should enter into force shortly. As the Convention provides for the equivalent exchange of information on request with immediate effect, it is expected that all the jurisdictions mentioned will rely on the Convention and will not proceed further with the negotiation of a TIEA.

3. Jurisdiction with which there has been some contact, but on which no further action has been taken to-date:

• Russia.

Note:  Russia has signed and entered into force the Multilateral Convention on

Mutual Administrative Assistance in Tax Matters and therefore does not need a TIEA to make requests for information.

2. DOUBLE TAXATION AGREEMENTS( DTAs)1

1. DTAs signed:

Malta –  signed January 2010

ratified by Malta February 2010

ratified by Jersey June 2010

in force – 19 July 2010

Estonia –

Hong Kong China –

signed December 2010

ratified by Jersey March 2011 ratified by Estonia December 2011 in force – 30 December 2011

signed February 2012

ratified by Jersey May 2012 ratified by Hong Kong June 2013 in force – July 2013

1 The DTAs listed are those that are to the standard of the OECD Model Convention. In

addition there is a DTA with the United Kingdom entered into in 1952 and a number of

partial DTAs, details of which can be found on the Taxes Office website – http://www.gov.je/TaxesMoney/InternationalTaxAgreements/DoubleTaxation/Pages/PartialDoubleTaxation.aspx A new DTA is in the process of being negotiated with the United Kingdom which will meet

the standard of the OECD Model Convention.

Page - 34

P.97/2018

Qatar –

Singapore –

Guernsey –

Isle of Man –

signed March 2012

ratified by Jersey May 2012 ratified by Qatar November 2012 in force – 22 November 2012

signed October 2012

ratified by Jersey January 2013 ratified by Singapore May 2013 in force – 2 May 2013

signed January 2013

ratified by Jersey June 2013 ratified by Guernsey May 2013 in force – 9 July 2013

signed January 2013

ratified by Jersey June 2013

ratified by the Isle of Man May 2013 in force – 10 July 2013

Luxembourg –  signed April 2013

ratified by Jersey July 2013 ratified by Luxembourg July 2014 in force – 5 August 2014

Rwanda –

Seychelles –

United Arab Emirates –

Cyprus –

Mauritius –

United Kingdom –

signed June 2015

ratified by Jersey October 2015 ratified by Rwanda April 2016 in force – 27 June 2016

signed July 2015

ratified by Jersey October 2015 ratified by Seychelles December 2016 in force – 5 January 2017

signed April 2016

ratified by Jersey September 2016 ratified by UAE February 2017 in force – 15 February 2017

signed July 2016

ratified by Cyprus August 2016 ratified by Jersey October 2016 in force – 17 February 2017

signed March 2017

ratified by Mauritius February 2018

signed July 2018

Page - 35

P.97/2018

2. DTAs ready for signing:

None.

3. Jurisdictions where DTA negotiations have been requested/initiated/draft agreements have been exchanged:

• Bahrain
• Botswana
• China (People's Republic)
• Ghana
• India
• Kenya
• Lesotho
• Liechtenstein
• Malawi
• Nigeria
• Saudi Arabia
• South Africa
• Swaziland
• Uganda
• Zambia.

4. Jurisdictions with whom Jersey does not have a bilateral TIEA or DTA, but who are party (i.e. have signed and entered into force) to the OECD/ Council of Europe Multilateral Convention on Mutual Administrative Assistance in Tax Matters, which provides for exchange of information on request on the same basis as the bilateral TIEAs:

• Albania
• Andorra
• Azerbaijan
• Bahamas (01-08-18)
• Bahrain (01-09-18)
• Barbados
• Belize
• Bulgaria
• Cameroon
• Colombia
• Cook Islands
• Costa Rica
• Croatia
• Georgia
• Ghana
• Greece
• Grenada (01-09-18)
• Guatemala
• Israel
• Kazakhstan

• Lebanon
• Liechtenstein
• Lithuania
• Macau (01-09-18)
• Malaysia
• Marshall Islands
• Moldova
• Monaco
• Nauru
• Nigeria
• Niue
• Pakistan
• Panama
• Peru (01-09-18)
• Russia
• Saint Kitts and Nevis
• Saint Lucia
• Saint Vincent and the Grenadines
• Samoa
• San Marino
• Saudi Arabia
• Senegal
• Slovak Republic
• Tunisia
• Uganda
• Ukraine
• Uruguay.

Jersey  became  a  party  to  the  Convention  on  1st  June  2014.  Some jurisdictions with whom TIEA negotiations have been engaged may decide not to progress the latter and rely on the Multilateral Convention.

5. Jurisdictions with whom Jersey has signed a TIEA or DTA who are also party to the Multilateral Convention (i.e. it is signed and in force):

• Argentina
• Australia
• Austria
• Belgium
• Brazil
• Canada
• Chile
• China (People's Republic)
• Cyprus
• Czech Republic
• Denmark
• Estonia
• Finland
• France

• Germany
• Hong Kong (01-09-18)
• Hungary
• Iceland
• India
• Indonesia
• Ireland
• Italy
• Republic of Korea
• Japan
• Latvia
• Luxembourg
• Malta
• Mauritius
• Mexico
• Netherlands
• New Zealand
• Norway
• Poland
• Portugal
• Romania
• Seychelles
• Singapore
• Slovenia
• South Africa
• Spain
• Sweden
• Switzerland
• Turkey
• United Arab Emirates (01-09-18)
• United Kingdom.

Enquiries  concerning  the  above  should  be  directed  in  the  first  instance  to – Mr. C. Powell,  Adviser –  International  Affairs,  Chief  Minister's  Department, telephone: 44(0)1534 440414; e-mail: c.powell@gov.je.

Colin Powell

Adviser – International Affairs  27 July 2018