Currently, the purchase of real estate by acquiring the share capital of a real estate company is exempt from stamp duty. However, the States of Jersey will soon introduce legislation to impose a tax equivalent to stamp duty on such a sale, closing the loophole.
Guernsey introduced such a measure in November 2017, in legislation that largely mirrors the same language as currently proposed in Jersey.
Following debate on 18 January and 8 February 2022, it was confirmed that the Taxation (Enveloped Property Transactions) Jersey 2022 will come into force on 4 April 2022. The law, which can be viewed here, was approved with two amendments, the last of which is here.
The law will remove one of the important advantages of a buyer seeking to acquire the shares of the holding company rather than simply buying full ownership of the property – although there may be other tax implications for changing the structure of detention.
In 2012, when the UK government announced its new tax scheme to address the perceived benefits associated with owning high-value UK residential property through companies or trusts, the UK saw a rush of trusts that owned real estate seeking to extract affected properties from their current investment structures in a process known as de-envelopment. We can expect a similar trend to be seen in Jersey.
The transfer of shares of such a company by an agent either to the beneficial owner of the company or to another agent who holds the shares in the name of the beneficial owner will be exempt from the new tax.
Similarly, the issue, transfer or redemption of units of a collective investment fund as defined in section 3 of the Income Tax (Jersey) Act 1961 will be excluded transactions. .
Although a number of limited exemptions are included, virtually all sales of real estate holding companies will now be subject to tax.
For more information on this subject, please contact Jonathan Hughes, Catherine MarshallChris Renouf or Sarah Parish in Ogier by phone (+44 1534 514000) or email ([email protected], [email protected], [email protected] Where [email protected]). The Ogier site is accessible at the address www.ogier.com.
Laura Shirreffs, senior collaborator, and Nathalie Le Cuirot, collaborator, participated in the writing of this article.