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Guernsey To Tighten Document Duty Rules

by Amanda Banks, Lowtax.net, London
17 April, 2017

Guernsey's document duty rules are set to be tightened to ensure the levy is payable whenever ownership of a property is transferred.

Under the present document duty regime, where Guernsey real property is transferred by way of conveyance, the document is registered and the transfer of ownership (and the payment) is clearly ascertainable for the purposes of assessing document duty.

However, where real property is owned by a company limited by shares, effective ownership of that property can be transferred to a third party by a sale of the shares in the company to a new beneficial owner, rather than by conveyance. In those circumstances, the share transfer agreement does not need to be registered, and no document duty is payable, regardless of the value of the property owned by the company, or the price paid for it.

New legislation has been proposed, which is contained in the Document Duty (Anti-Avoidance) (Guernsey) Law, to ensure transactions, other than conveyances, that have the effect of transferring Guernsey real property in a form similar to ownership, are treated the same way as registered conveyances.

Gavin St Pier, President of Guernsey's Policy & Resources Committee, welcomed the proposed changes, commenting: "As part of the 2012 Budget Report, [Guernsey's legislature] approved the principle of the introduction of a 'regime in Guernsey, which taxes sales of interests in entities that own either commercial or domestic real property in Guernsey at the same rate as applied under the Document Duty Law for standard conveyances."

He added: "The reasons for the introduction of the new regime are two-fold; firstly to ensure a consistent, fair, and equitable approach to all property transactions, and secondly, to raise additional revenue."

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