Stamp Duty Experts Dublin

As you are aware, Finance Act 2017 increased the rate of stamp duty on the transfer of non-residential property from 2% to 6% with effect from midnight on Budget Day.

The change applied to instruments executed on or after 11^th October 2017.

This dramatic increase will, most likely, reduce the number of commercial property transactions carried out in Ireland in 2018.

On 27^th October 2017, The Irish Revenue Commissioners published Revenue eBrief No. 94/2017 outlining the transactions eligible for the 2% Stamp Duty rate under Transitional Relief Measures:

In circumstances where a binding contract has been entered into before 11^th October 2017 the rate of stamp duty will remain at 2%, provided the following two conditions are met:

1. the instrument was executed before 1^st January 2018, and

1. the instrument contained certification that the instrument was executed on foot of a binding contract entered into before 11^th October 2017.

A person who filed a stamp duty return before the enactment of the Finance Bill and who was satisfied that the transitional measures would have applied if the Finance Bill had been enacted, had two options:

1. To file a return through the e-stamping system, pay stamp duty of 6% and be issued with a stamp certificate.  Now that the Finance Act has been enacted the filer can amend the Return, submit the relevant documents to Revenue thereby requesting a refund of 4% (i.e. the difference between the 6% and 2% rate). Please follow attached link for detailed instructions:

 https://www.revenue.ie/en/online-services/support/documents/help-guides/stamp-duty/amending-stamp-duty-return-on-ros.pdf or

2. To file a return through the e-stamping system and pay the stamp duty at the lower rate of 2%.  In this situation a stamp certificate was not be issued at this stage.

On 4^th January Revenue published guidelines on how this postponed stamp certificate can be obtained. To receive the certificate, you must amend the Stamp Duty Return by following the link:

https://www.revenue.ie/en/online-services/support/documents/help-guides/stamp-duty/amending-stamp-duty-return-on-ros.pdf

For those who filed their Returns but did not pay the correct amount of Stamp Duty at the 2% rate, you will not have received a Stamp Certificate.

In order to obtain the stamp certificate you must amend the Stamp Duty Return, pay the Stamp Duty of 2%, pay any Interest accruing on the late payment of Stamp Duty and pay any surcharge arising on the late filing of the Return, if relevant.

Once the payments have been processed your Stamp Certificate will issue automatically.

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so. This information should not be acted upon without full and comprehensive, specialist professional tax advice.

Finance Act 2017 increased the rate of Stamp Duty on all non-residential properties from 2% to 6% and includes non-residential lease premiums.  This 6% rate applies to documents executed on/after 11^th October 2017.

Although transitional measures have been introduced, this higher Stamp Duty rate will apply for conveyances executed from 1st January 2018.

To be able to avail of the previous 2% rate on commercial property (i.e. where contracts were entered into before 11th October 2017), the two following conditions must be met:

1. a binding contract must have been in place before 11th October 2017 and
2. the instrument for the transfer must have been executed before 1^st January 2018.

The increased Stamp Duty rate also applies to certain shares which derive their value or the greater part of their value, directly or indirectly, from Irish non-residential land and buildings.  The 6% Stamp Duty Charge was introduced by Section 31C SDCA 1999 on conveyances/transfers of shares in Irish and non-Irish companies.  The provision also applies to units in an Irish real estate fund, interests in foreign collective investments schemes as well as to interests in a partnership.

This 6% Stamp Duty rate will apply if the result of the transfer is a change in the person/persons having direct/indirect control over the non-residential property and where it would be reasonable to consider that the immovable property concerned was:

1. acquired by the company, IREF or partnership with the sole or main object of realising a gain from its disposal,
2. being developed by the company, IREF or partnership with the sole/main object of realising a gain from its disposal when developed, or
3. held as trading stock by the company, IREF or partnership.

Although the legislation applies to any instrument executed on or after 6^th December 2017, there are transitional provisions, which will limit the Stamp Duty rate to its existing rate (i.e. 1% or qualifying for an exemption) where:

1. A binding contract was entered into before 6^th December 2017,
2. the instrument is executed or the binding contract is completed before 1st March 2018 and
3. the instrument contains a statement certifying that the instrument was solely executed in pursuance of said binding contract which was entered into prior to 6^th December 2017.

The new rate will apply to contracts for sale of such shares as well as actual transfers of shares.

As the 6% rate applies to all non-residential property, this means the disposal of goodwill or the transfer of Debtors, as part of the sale of a business, could also give rise to a 6% Stamp Duty charge.

The rates of stamp duty on residential property remain at a rate of 1% up to the first €1,000,000 with 2% payable on the excess over €1,000,000.

The Stamp Duty rate on leases of commercial property will continue to be charged at a rate of 1% on the average annual rent.  However, where the landlord receives a premium from the tenant at the commencement of the lease, this will be subject to Stamp Duty at 6%.

Finance Act 2017 (Section 83D SDCA 1999) introduced a Stamp Duty Rebate Scheme in relation to land purchased for the purpose of developing residential property.  The Act provides that where Stamp Duty at the new higher rate of 6% is paid on the acquisition of land which is subsequently used to develop residential property, then the purchaser will be entitled to a rebate of 2/3 of the 6% upfront duty paid i.e. a potential refund of up to 4% can be claimed provided the following conditions are satisfied:

• The Stamp Duty Rebate Scheme is limited to the proportion of land used for residential development.
• The Scheme only applies where construction operations for residential property commence before 1^st January 2022 and construction must begin within thirty months of the date the land was acquired.
• The time required to conclude any planning appeal can be added to this thirty month period.
• The repayment cannot be claimed in advance of the commencement of construction operations.
• There is a four year time limit on claiming a repayment. The supporting documentation required to substantiate the claim include (i) a certified copy of the deed of transfer, (ii) a statutory declaration stating that building work commenced within the thirty month period immediately after the date the instrument was executed and (iii) written consent by all the accountable persons to the person making the claim.
• Where the Stamp Duty rebate claims relates to only part of the land, the Statutory Declaration must clearly state the specific part of the land to which the claim relates.
• The rebate will not carry interest.
• The refund can only be claimed via Revenue’s e-Stamping system.
• In situations where the residential development is being carried out in phases, repayments can be sought on a phased basis.
• The Rebate will be clawed back in two situations: (i) where the residential development is not completed within two years of acknowledgement, by the relevant building control authority, of the commencement notice or (ii) where at least 75% of the units or a minimum of 75% the total area of the land in question is not occupied.

Construction operations” is defined as the construction of buildings or structures including the preparatory operations of site clearance, drainage, earth-moving, excavation, laying of foundations and provision of roadways and other access works.

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so. This information should not be acted upon without full and comprehensive, specialist professional tax advice.