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Joint ownership of shares (zero / ten tax system)

‚ÄčAn individual is deemed to own shares in a Jersey company if he has any interest in them, whether equitable, legal or contractual, other than an interest as a bare nominee or bare trustee. Such ownership will be deemed to exist even if the individual owns the shares through, or partly through one, or a series of, bodies corporate, trusts, partnerships or foundations.

More than one individual may be deemed to own a single share or number of shares in a Jersey company.

An individual resident in Jersey who is deemed to own more than 2% of the ordinary share capital of a Jersey trading company or an investment company will be subject to the shareholder deemed distribution or attribution provisions.

Example 1

ABC Trading Limited

Issued ordinary share capital:- 100 shares

Mr A owns 4 shares [4% of the issued ordinary share capital]
Mr B owns 96 shares [96% of the issued ordinary share capital]

Both Mr A and Mr B are resident in Jersey.

Mr A and Mr B are subject to the shareholder deemed interim dividend provisions.

Mr A disposes of his four shares into joint ownership with Mr C so that they now each jointly own four shares being 4% of the ordinary share capital of the company.

This is a tax trigger event and Mr A will be liable to tax on a shareholder deemed final dividend in respect of those 4 shares because he has disposed of them.

Neither Mr A or Mr C are now deemed to own more than 2% of the ordinary share capital of the company and neither are subject to the shareholder deemed interim dividend provisions. Nevertheless they remain liable to declare on their respective personal tax returns any cash dividends paid to them by the company in respect of their joint ownership of the ordinary shares.

Example 2

XYZ Investments Limited

Issued ordinary share capital: 100 shares

Mr A owns 4 shares [4% of the issued ordinary share capital]
Mr B owns 96 shares [96% of the issued ordinary share capital]

Both Mr A and Mr B are resident in Jersey.

Mr A and Mr B are subject to the shareholder attribution provisions.

Mr A disposes of his four shares into joint ownership with Mr C so that they now each  jointly own four shares being 4% of the ordinary share capital of the company.

Neither Mr A or Mr C are deemed to own more than 2% of the ordinary share capital of the company and neither are subject to the shareholder attribution provisions. Nevertheless they remain liable to declare on their respective personal tax returns any cash dividends paid to them by the company in respect of their joint ownership of the ordinary shares.

Persons A and C in the above examples could be connected persons [eg spouses] or unconnected persons.

It remains open for the Comptroller to use his anti avoidance of income tax provisions within the Income Tax Law if he is of the opinion that the purpose or one of the main purposes of the transfer or disposal of shares is the reduction or avoidance of a liability to Jersey income tax.

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