By Gascon

Important amendments to the Act respecting duties on transfers of immovables (the “Act”) were announced in the provincial budget for the year 2016-2017.

UNPUBLISHED TRANSFER IN THE LAND REGISTER

Previously, the Act provided that transfer duties were only payable upon registration of the deed of transfer in the land register.

Thus, in order to avoid the payment of transfer duties, when the title to the property was held by a nominee, it was possible to sign a deed of sale of the immovable with its true owner without publishing it in the land register, concurrently with the purchase of the nominee’s shares.

Since March 18, 2016, unpublished transfers, commonly known as off-title transfers, are subject to the Act, and thus, transfer duties are payable for any transfer of immovable.

The Act obliges the transferee to disclose the off-title transfer to the municipalities within 90 days of the transfer, failing which the transferee will be required to pay a supplementary duty equal to 150% of the transfer duties payable on the transfer of the immovable.

EXEMPTIONS

The conditions for exemption from the payment of transfer duties have also been amended.

In the case of a transfer of an immovable by an individual to a legal person or between closely related legal persons, the exemption will apply only if, both at the time of the transfer and for the 24 months that follow, the party transferring the immovable holds, at all times, 90% or more of the voting rights of the transferee legal person.

Following the same principle, in the case of a transfer by a legal person to a natural person, there is an exemption if, at all times during the 24 months preceding the transfer, the natural person to whom the immovable is transferred held 90% or more of the voting rights of the transferor legal person.

If the latter was incorporated during this 24-month period, the 90% threshold must be met at all times from the date of incorporation until the transfer.

The obligation to disclose and the payment of transfer duties are payable if the conditions mentioned above are not met.

It will therefore be necessary to take these amendments into account in any transfer of ownership.

Thus, the holding structures currently used, such as, for example, one involving a nominee, will have to be re-evaluated.

By Georges Jebara