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UK signs new Double Tax Treaties with Jersey, Guernsey and the IOM

Mark McMullen

On 2 July 2018, the UK signed new double tax treaties with Jersey, Guernsey and the Isle of Man. This is a welcome update and unsurprising since the current double tax treaties were entered into in the 1950s, albeit intermittent updates have been made since then.

The new treaties are very similar to each other and include provisions that incorporate measures reflecting the outcomes of the Base Erosion and Profit Shifting project as well as other important updates such as amendments to the definition of corporate residency, permanent establishment and the corresponding allocations of profits.

One of the most important updates to the treaties is the introduction of a residence tie-breaker for individuals. This residence tie-breaker is heavily based on the one included in the OECD model. This is useful as it means dual residents of the UK and one of the Crown Dependencies can more readily access treaty relief. As the new treaty rules are closely aligned with the OECD model, guidance and commentary from established case law should also help in obtaining treaty relief.

The treaties are not yet enacted in law but will be in force once each jurisdiction has completed their parliamentary procedures, which is expected to occur by early 2019. Whilst this is the case, it would be beneficial to assess your options now so that appropriate action can be taken in order to benefit from the changes in treaty rules. For further information on the options available to you please contact Moore.