Stamp duty is a tax charged on instruments (i.e. written documents) and not on transactions. Irish stamp duty legislation is found in the Stamp Act, 1891 as amended, ("the Stamp Act"). The general rule is that any document which is specified in the Stamp Act and which is either executed in Ireland, or wheresoever executed, relates to any property situate in Ireland or any matter or thing done or to be done in Ireland, is chargeable with stamp duty. Documents specified in the Stamp Act are generally documents which have the effect of transferring either the legal or beneficial ownership of property whether tangible or intangible. Depending on the nature of such documents different rates of stamp duty apply, and is levied generally on the higher of the market value of the asset or the consideration attributable to the asset being transferred.
Stamp duty is payable within 30 days of execution of the relevant document. In the alternative, a document may (and in some instances must) be submitted to the Revenue Commissioners for adjudication during the 30 day period in which case stamp duty is not payable until such time is an assessment is made by the Revenue Commissioners. Stamp duty must be paid within 14 days of such an assessment.
With careful planning it is possible to minimise the stamp duty payable on documents relating to any particular transaction.
Details of some of the more important transactions affected by stamp duty and of some of the exemptions and reliefs available are set out below.
Real Property Transactions
A. Land Purchases
The purchaser of land or buildings in Ireland (where the value exceeds IRo5,000) is obliged to pay stamp duty on the deed/document transferring ownership. Depending on the value of the transaction, different rates of stamp duty ranging from 1% to 6% apply. In the case of a purchase of land the value of which is IRo60,000 or more stamp duty is chargeable at the rate of 6%.
B. Leases
In case of leases it is the lessee who is responsible for discharging any stamp duty payable. In general stamp duty is chargeable at the rate of 1% on the first year's rent on leases of real property not exceeding 35 years while any premium payable in respect of the lease is chargeable to stamp duty at rates ranging from 1% - 6% depending on the amount of the premium. Leases of equipment are generally exempt from stamp duty.
Share Purchases
The transfer of shares in an Irish incorporated company is chargeable with stamp duty at the rate of 1% on the greater of the market value or the consideration being paid for the shares being transferred. Again the obligation is on the transferee to discharge the stamp duty. There are a number of reliefs available in respect of the transfer of shares some of which are referred to below.
Contracts
The general rule is that contracts for the sale of property are not subject to stamp duty. It is the deed or document which actually transfers ownership of the property which is stampable. However, contracts which have the effect of transferring certain kinds of property including goodwill, the benefit of contracts, patents / designs / trademarks / licences etc., book debts, cash on deposit at a bank or elsewhere and fixtures attaching to leasehold property may be chargeable to stamp duty.
Companies Capital Duty
Companies capital duty is payable on the issue of shares in a capital company and on certain other transactions. The most usual types of bodies falling within the charge to capital duty are limited companies incorporated in Ireland and having their effective centre of management in Ireland or in a non-EU member state. The issue of shares by unlimited companies is not subject to capital duty. Capital duty is chargeable at the rate of 1% on the actual value of the new assets contributed to a company in consideration of the issue of shares provided that the minimum amount on which the duty is payable is the nominal value of the shares allotted. There are certain reliefs and exemptions available in respect of companies capital duty including relief in respect of reconstructions and amalgamations available in respect of companies capital duty including relief in respect of reconstructions and amalgamations of companies involving the issue of shares in one company to another.
Reliefs/Exemptions
There are a number of reliefs and exemptions available including the following:
- (a) transfers of property between spouses are exempt from stamp duty;
- (b) transfers of certain property (excluding shares) between family members (e.g. brother to sister, uncle to niece etc) are subject to lower rates of stamp duty (effectively half that of the normal rate);
- (c) transfers of property (which includes shares) between "associated" companies are exempt from stamp duty provided certain conditions are fulfilled and the appropriate statutory declarations are filed with the Revenue Commissioners. Associated companies are companies with a genuine 90% shareholding link;
- (d) relief from stamp duty and companies capital duty is also available in the case of certain company reconstructions or amalgamations involving:-
In order to qualify for the reliefs available on company reconstructions and amalgamations certain conditions must be complied with and statutory declarations confirming compliance with such conditions must be submitted to the Revenue Commissioners.
- (i) the transfer of shares in exchange for the issue of shares in another company;
- (ii) the transfer of shares in exchange for the undertaking of another company; or
- (iii) the issue of shares in exchange for the undertaking of another company.
For further information contact Caroline Devlin on + 353 16 76 46 61 or enter text search "Arthur Cox" and "Business Monitor".
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
