New double tax treaties with Jersey, Guernsey and Isle of Man

In the past few months new UK treaties with the three Crown Dependencies have come into force, see:


Guernsey and

Isle of Man

You can read the debate of 13 November 2018 on the new treaties in the House of Commons Delegated Legislation Committee by clicking here.

The treaties came into force on 19 December 2018 for the Jersey and Isle of Man treaties and 9 January for the Guernsey treaty.

The predecessor treaties  date back to the 1950s and they have now been brought up to date and are broadly drafted in line with the OECD’s 2017 edition of the Income and Capital Model Convention and Commentary.

Under the new treaties, full relief is provided for withholding tax suffered on qualifying interest and royalties, subject to the application of a new principal purpose test for treaty benefits (in line with Action 6 of the OECD’s BEPS project). Companies looking to rely on this relief will therefore need to assess whether the principal purpose test is satisfied, based on their existing or proposed arrangements.

The new treaties also all now include a non-discrimination clause (Article 24) and should in principle be considered ‘full treaty countries’ for UK tax purposes going forward. Multinational enterprises should therefore look to consider the impact of this change in respect of double taxation relief claims, application of the branch exemption election, and the forthcoming offshore receipts in respect of intangible property legislation. The latter will be Schedule 3 of Finance Act 2019: the Finance (No 3) Bill which will become Finance Act 2019 had its 3rd reading in the House of Lords this month (February 2019).