As you will be aware, the rate of stamp duty on non-residential property was increased from 2% to 6% with effect from 11 October 2017. This increase is subject to transitional measures whereby certain instruments executed on or after 11 October will enjoy the 2% rate. In order for the transitional measures to apply, the following conditions must be met:

(i) there was a contract in place before 11 October 2017 that was binding on the parties to the contract;

(ii) the instrument contains a certificate to this effect; and

(iii) the instrument of transfer is executed before 1 January 2018.

In the Report Stage debate on the Finance Bill 2017 in the Dáil on 23 November 2017, the Minister for Finance noted a possible further amendment to the Finance Bill relating to the increase in stamp duty on non-residential property.

On anti-avoidance, I indicated on Committee Stage that I would bring forward an amendment to provide for certain anti-avoidance measures in connection with the upward adjustment to the rate of stamp duty on non-residential property. I will get those measures right because I know what happened in the past and I am determined to ensure this measure is implemented fully in the way that I intend. It is a complicated area that presents a number of challenges and I will seek to fully address the issue when the Finance Bill is in the Seanad. I will deal with the matter then.”

Further clarity on the proposed anti-avoidance measures was provided in the Fourth List of Recommendations (Seanad Committee Stage) to the Finance Bill 2017. In broad terms, the amendment proposed, applies the 6% rate of stamp duty to the transfer of shares in companies and units in Irish real estate funds (IREF’s) that derive the greater part of their value from Irish commercial property with effect from 6 December 2017 where the Irish commercial property concerned was:

  • acquired by the entity with the sole or main object of realising a gain from its disposal;
  • developed by the entity with the sole or main object of realising a gain from its disposal; or
  • held as trading stock.

Consequently, these changes should not affect transfers of shares or units even where the shares or units derive the greater part of their value from Irish commercial property provided the property was not acquired with a view to realising a gain on its disposal or held as trading stock (e.g., transfer of shares in a fully operational manufacturing business, hotel or nursing home).

The extent of the intended territorial remit of the draft legislation remains unclear and we await clarification from the legislature and/or Revenue on this point.

There is a ‘grand-fathering’ provision in the draft legislation such that the 1% stamp duty rate on the transfer of shares or units (even where a transfer of those shares or units comes within the draft legislation) will continue to apply where:

(i) there was a contract in place before 6 December 2017 that was binding on the parties to the contract;

(ii) the instrument contains a certificate to this effect; and

(iii) the instrument of transfer is executed before 1 March 2018.