Tax Treaty Case Law around the Globe 2012

South Africa: Transfer of Seat and Exit Taxation: Treaty Override?

4.1. Introduction

The Supreme Court of Appeal of South Africa handed down its decision in the matter of Commissioner for the South African Revenue Service v. Tradehold Ltd on 8 May 2012. This matter was heard on appeal from the Tax Court. The decision resulted in a next-day media release by the Ministry of Finance, and numerous academics and practitioners have provided comment on both the decision and the media release. On 5 July 2012, draft legislation was released proposing various amendments aimed, in part, at preventing the outcome achieved in this case.

This case represents one of the first key capital gains tax decisions involving a change of residence since the capital gains tax provisions became effective on 1 October 2001.

4.2. Facts of the case

4.2.1. Facts common to both courts

Tradehold Ltd is a listed company on the Johannesburg Stock Exchange and a company incorporated in South Africa. The only relevant asset under consideration by the courts was Tradehold Ltd’s 100% holding of the shares in Tradegro Ltd, a company incorporated in Guernsey, which in turn owned approximately 65% of the issued share capital of...