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What's happening to Isle of Man Offshore Banking?
New disclosure regulation from 1st July 2011.
You've probably heard rumours about this for some time.
We've had many clients asking for clarification, as IOM banks don't seem to agree on what it really means to clients [it's subject to their interpretation] it's difficult t do so.
"Does this concern me?"
It will affect ALL clients with EU passports and those with non EU passports using EU addresses.
"I've been told it only applies to EU nationals as I'm not an EU national it doesn't affect me: "
What address was used when you opened the account?
YFSOL will normally only use your boat registration address [we ONLY deal with yachtsmen] which if outside EU [e.g. Cayman Islands] means that disclosure won't apply , if the boat registration is within EU disclosure will apply.
If you [or your adviser] have used an onshore address within the EU then disclosure will apply.
"I've been told that it only applies to interest paid on my account,I think my account is a non interest bearing account:"
Most accounts pay interest even if only a little, so fall into the disclosure net. Clearly only the interest will be disclosed, but of course then the account itself has been flagged.
So far the only conclusion we can reach is that non EU nationals with clearly non EU addresses or boat registrations are exempt.
Guernsey and Jersey are not part of this yet, but it's our view that this just a question of time.
Many of our clients have asked for an alternative bank account facilty which won't fall into the discosure net.
We are currently in negotiation with a leading non EU bank with a view to providing accounts for our yachting clients. We hope to be able to have these available towards end June 2011.
Here's the letter that went out last week to all Standard Bank International [IOM]EU resident clients.
CHANGES IN RELATION TO THE EUROPEAN UNION SAVINGS TAX DIRECTIVE (EUSTD) IN THE ISLE OF MAN EFFECTIVE 1st July 2011.
The EUSD
The European Union Savings Directive was introduced in 2005 and is an agreement between the EU Member States to automatically exchange information between states about individuals who reside in one EU Member state but earn interest in another.
In addition to the EU Member states' application of the EUSD, some jurisdictions outside of the EU, including the Isle of Man, elected to apply the EUSD but with additional transitional options including the application of a 'retention' tax on interest earned until full exchange of information was subsequently introduced by the jurisdiction. These jurisdictions also made provision for individuals to claim an exemption from the EUSD.
Changes to Isle of Man legislation
The Isle of Man Government subsequently passed legislation in 2010 to implement a change of policy in relation to the EUSD and move fully to the automatic exchange of information from the 1st July 2011.
This means that the retention tax and exemption options currently available to customers resident in an EU member state who have accounts withany financial institution in the Isle of Man will be withdrawn.
What is Exchange of Information?
Under the exchange of information rules, all financial institutions in the Isle of Man who make interest payments to individuals resident in the EU are required, on an annual basis, to submit to the Isle of Man tax authority information about interest paid. This information includes the name, address, date and place of birth of the account holder(s), together with the account number and the amount of interest earned in the previous tax year for each account holder. The Isle of Man tax authority will in turn forward this information to the tax authority in the accountholders country of residence.
How will the move to automatic exchange of information affect you and your account?
With effect from the 1st July 2011, all EU resident customers who hold deposit accounts with Standard Bank Isle Of Man Limited who have elected for the application of retention tax or are currently considered to be exemptwill automatically be subject to the exchange of information. You do not need to take any action and can continue to use your account as now.
After the 1st July 2011 interest will be paid gross and should be declared to the relevant tax authority via your tax return. Interest earned up to and including the 30th June 2011 will be subject to retention tax deducted at source.
Standard Bank Isle of Man Limited is unable to provide personal tax advice. You should seek advice from a suitably qualified tax adviser.
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