Commercial lease rental GST – Overview
The Goods and Services (Jersey) Law 2007 specifies that commercial lease rental payable under leases of commercial premises attracts commercial lease rental GST charge. This is presently 5%.
Landlords are liable for GST on taxable turnover of over £300.00 per annum (at present) in relation to commercial lease rental. In such cases the Landlord will be obliged to pay GST on the rent received.
The only exception is where the Tenant is an International Services Entity (ISE). In such cases GST remains zero-rated on the rent. A non-ISE taxable Landlord should ask for a copy of the Tenant’s ISE certificate to ensure that it is not required to pay GST to and is not an (ISE))
In all commercial leases the Landlord should include a clause which allows the Landlord to recover any commercial lease rental GST payable on the rent (and other payments) from the Tenant. If such a provision is not included, then the Landlord has no right to recover the GST from the Tenant.
Even if the Tenant is an ISE, the landlord would be advised to include a recoverability provision as on assignment a new tenant may not be an ISE. A non-ISE tenant (if GST registered itself) should be able to offset any GST it pays on the rent against the GST it is charging for its goods or services.