| Practice area: | Public Policy |
|---|---|
| Client: | Government of Jersey |
| Published: | 16 February, 2022 |
| Keywords: | Analysis economics LE report Public Policy report |
This report responds to a request from the Government of Jersey’s Economics Unit to provide an assessment of the economic and distributional impacts of the proposed changes set out in the Draft Taxation (Enveloped Property Transactions) (Jersey) Law. The proposed changes analysed in the report are the introduction of a new Enveloped Property Transaction Tax (EPTT) and the extension of the Land Transaction Tax (LTT) to include commercial properties.
The proposed changes are intended to close a perceived gap in the current treatment of property transactions in Jersey’s tax system, whereby transactions involving (i) the transfer of shares in a company holding residential or commercial property in Jersey, where the articles of association of that company do not confer a right of occupation in the property, or (ii) the transfer of shares in a company that owns commercial property in Jersey where the articles of association of that company confer a right of occupation in the property do not attract Stamp Duty or Land Transaction Tax. This gap is perceived to create an incentive to hold property in Jersey in a corporate structure, known as ‘enveloping’ that property.
The proposed EPTT and extension of LTT are intended to ensure that the tax treatment of property transactions is consistent whether or not those transactions involve enveloped property, ensuring the neutrality of the tax treatment of such transactions.