What is a ‘Withholding Tax’ or Retention Tax regime?
Some countries are withholding tax from savings income paid to individuals. In the Isle of Man this will be known as a ‘Retention Tax’. These countries are: Austria, Belgium, Luxembourg, British Virgin Islands, Guernsey, Isle of Man, Jersey, Netherlands Antilles. Paying agents in these countries will be withholding tax from savings income they pay. Each country had the option whether they would adopt a withholding tax or not. The UK chose not to adopt the tax. Those countries which operate the withholding tax also have to report interest paid on savings to the resident’s tax authority. They must indicate how much of the total amount relates to customers in each prescribed territory. The identity of the recipient will not be reported, thus preserving individual confidentiality.
