At present, the purchase of a property through the acquisition of the share capital of a property owning company is exempt from stamp duty. However, the States of Jersey shortly intends to bring forward legislation to impose a tax equivalent to stamp duty on such a sale, effectively closing the "loophole".
Guernsey introduced such a measure back in November 2017 in a law which reflects much of the same language as that now proposed in Jersey.
The Law Officers' Department has confirmed that a draft Law has been lodged for debate – the Draft Taxation (Enveloped Property Transactions) (Jersey) 202-. Following local debate and if approved by the States of Jersey, it will then require Privy Council approval, likely to be discussed at their April meeting which is expected to be held post Easter. The draft Law will come into effect seven days after registration by the Royal Court, so practically the Law is likely to be brought into force, assuming it is approved, in early May.
The draft Law can be viewed here, and the States Assembly discussion papers can be viewed here.
Whilst a number of limited exemptions are included, virtually all sales of property holding companies will now be subject to tax. The issue, transfer or redemption of units in a collective investment fund as defined in Article 3 of the Income Tax (Jersey) Law 1961 will be excluded transactions under the current draft.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
