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Dividends from resident companies (i.e., non-exempt companies) are deemed to arise to the person entitled to them on the date of declaration and, whether any tax is deducted or not, to be income of the amount received grossed-up at the standard rate. The recipient of a dividend from which tax has been deducted is entitled to an immediate tax credit equal to the deduction which is applied towards the tax liability of the recipient.
Non resident and exempt companies are not required, nor entitled, to deduct tax at source from any payments made to non residents. There are no provisions requiring a Jersey company to account for tax deducted in respect of dividends. In practice dividends are paid out of taxed profits and tax paid by the company is imputed to the shareholder.
Income tax at the standard rate of 20% is deducted at source from interest, royalties, annuities and other annual payments other than interest paid to banks. However this does not apply to international business companies. There is statutory tax relief for interest paid to a bank carrying on business in Jersey. This is extended by concession to include interest paid to banks and certain other financial institutions carrying on business overseas.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
For further information contact Jonathan G. Hooley on Tel (indirect line): + 44 (0) 1481 721000, Tel (direct line): +44 (0) 1481 719544, Fax: +44 (0) 1481 722373.
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