Maltese have €74m stashed away in Jersey

Maltese individuals currently hold at least €74 million in accounts in Jersey, according to estimates provided by British banking sources.

The British isle of Jersey (known internationally as a tax haven) passed to the Maltese authorities the equivalent of €417,000 for interest earned on accounts of Maltese non-residents for the year 2006, according to the sources.

"The €74 million in Maltese holdings in Jersey is just a very conservative estimate," they told The Sunday Times.

The information surfaces for the first time following the introduction of an EU-wide Savings Tax Agreement, reached in 2005, whereby EU member states and other countries who decided to join this agreement - including Switzerland, Liechtenstein and Monaco - agreed to start sharing information and passing to each other part of the proceeds from interest paid on accounts of non-residents.

The agreement states that individuals holding accounts may choose to opt for voluntary disclosure of information to the tax authorities of the member state of residence as an alternative to paying this retention tax.

For 2006, it is estimated that just 50 per cent of the total interest was voluntarily disclosed. This means that Maltese residents hold much more money in Jersey accounts, according to the sources.

It is a known fact that for decades, many Maltese residents used to deposit their savings into foreign accounts to avoid paying tax and to benefit from higher interest rates.

Despite various schemes introduced by the government over the past years in order to bring this money back to the Maltese economy, only few took the opportunity and many millions are believed to remain stashed overseas.

The new figures revealed from Jersey strengthen this theory after it was revealed last year that Maltese non-residents were holding €90 million in accounts in various Swiss banks.

Although Maltese 'secret' account holders in foreign territories are now being forced to pay tax on interest, the figure of 15 per cent is no higher than Malta.

However, the scenario will change in a few years' time as the EU agreement stipulates a staggered increase in retention tax making it more expensive to retain money abroad. According to the agreement, the 15 per cent retention tax will only apply for the first three years of the agreement. From next year, the rate will go up to 20 per cent, while as from 2012, undisclosed account holders will start paying 35 per cent on all interest proceeds.

The agreement stipulates that 75 per cent of the tax collected should be passed on to the member state of the country of residence of the account holder while the remaining 25 per cent is to be kept by the account-holding country as an administrative charge.