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EU discusses zero-ten tax regime

07 February 2011

The EU Council’s High Level Working Party has met to consider Jersey’s zero-ten corporate tax regime and has confirmed the earlier findings of the Code Group. It has concluded that the combination of the Deemed Distribution rules and zero-ten does give rise to harmful effects.

The Code Group will now meet on the 17 February to formally assess Jersey's corporate tax regime.

The Treasury and Resources Minister, Senator Philip Ozouf commented "We are pleased that we now have clarity and that this conclusion has confirmed our expectations.

“Over the coming weeks we will be considering all of the appropriate options for Jersey and will announce a course of action once this process is complete."

A brief background to zero-ten

The EU Code of Conduct Group was set up in 1998 to assess whether business tax measures in Member States were harmful, using a Code of Conduct as the basis for assessment. The scope of the code included business tax measures in the dependent and associated territories of Member States.

In 1999 the Code Group found that some of Jersey's then existing tax measures were found to be harmful under the Code. Jersey replaced these measures with the present 0/10 corporate tax regime.

In 2003 this was accepted as being code compliant, but at that time the regime did not include an element of shareholder taxation which the Code Group has now considered.

The Code of Conduct Group decided that the 0/10 regime in its present form does give rise to harmful effects and recommended that the ECOFIN Council should review this, on the basis of the conclusions of the High Level Working Party.

Zero-ten briefing paper and statement from Chief Minister
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