Overseas ETFs exempt from tax

To enhance and develop the market in Exchange Traded Funds (ETFs), the Chancellor announced the removal of Stamp Duty Reserve Tax from the purchase of overseas ETFs. Legislation should be in place by February 2007.

The change to the regulations will enable an overseas ETF to qualify for exemption provided that both its central management and control and the location of its share register are outside the UK. Transfers of shares in ETFs incorporated in the UK will continue to be subject to stamp duty in the same way as shares in other UK companies.

The change will bring into line the stamp duty reserve tax treatment of overseas incorporated ETFs, overseas funds whose shares are not traded on exchange and shares in overseas companies that are traded in London.

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