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HMRC internal manual

VAT Finance Manual

Securities and related services: transfers of shares in property-owning companies

Article 15(2)(c) of the VAT Directive gives member states the option to treat shares that give the shareholder a right over interest in immovable property as tangible property. If member states implement this option into national law supplies of such shares would be subject to the normal VAT rules for supplies of land and property.

The UK has not implemented this option into UK law. Therefore when land or property is held within a corporate structure (commonly referred to as “property enveloping”) so that any supplies of that land or property is made in the UK through a sale of shares, that supply is exempt from VAT.  Businesses acting as agents in arranging that supply can exempt their agent’s fees from VAT provided they are acting as an intermediary (see VATFIN 7200). This VAT treatment was confirmed by the ECJ in its judgment in the case of DTZ Zadelhoff (C-259/11).