Landsbanki Guernsey Limited in Compulsory Liquidation update 17 February 2011
As previously noted in the Joint Liquidators’ letters to depositors dated 15 December 2010 and 25 January 2011, the Joint Liquidators made the decision to adopt the Exchange of Information (“EOI”) basis early so that distributions could be made to all depositors without the deduction of retention tax. As tax is payable on all interest amounts included in the admitted claim and ring-fenced interest received (as shown on the 19 January 2011 statement issued to depositors), it is likely that depositors would suffer tax on interest which may ultimately not be recovered. As such, the Joint Liquidators took the view that it would be beneficial for depositors to receive amounts gross of tax and that the treatment of interest received can be taken up with each individual’s home tax authority.
The Joint Liquidators have been contacted by a small number of depositors, regarding their decision to adopt the EOI basis from 1 January 2011 requesting, for personal reasons, that the Joint Liquidators retain the retention tax basis for this payment.
As a result of these enquiries, the Joint Liquidators have agreed with the Guernsey Tax Office that either Retention Tax or Exchange of Information can be applied in respect of this payment. As such any EU resident depositor who had previously elected for retention tax (rather than EOI) and who wishes to retain Retention Tax status for this payment should write to the Joint Liquidators requesting this treatment at the time of submitting their payment form.
It should be noted that a significant number of depositors affected by this decision have already returned their forms and the tax previously deducted has been repaid to them as previously advised. These depositors will be included in the Exchange of Information provided to the Guernsey Tax Office in March 2012.
EU Depositors should be aware, however, that, by law, only EOI will be available from 1 July 2011 onwards.