Commercial Property - Stamp Duty Changes - Republic Of Ireland

Author:Ms Rachel Niall and Susanne Cunningham
Profession:Hayes Solicitors

The Finance Act 2017, which came into law in the Republic of Ireland (ROI) on 25 December 2017, introduced a significant change to stamp duty.

The surprise was the tripling of the stamp duty rate from 2% to 6% on commercial property transactions applying from 11 October 2017.   Transitional measures allowed for transactions entered into before 11 October 2017 and completed before 1 January 2018 to avail of the lower rate, but otherwise it was straight to the new rate.  

As originally drafted the Finance Bill 2017 did not exclude the 1% rate for commercial property being transferred by a share sale or sale of partnership interests.   To close this loophole an amendment to the Act was made without warning (effective 6 December 2017) to ensure that the 6% stamp duty rate would in fact apply to transfers of shares in certain circumstances where property was involved.   The 6% rate applies where:

There is a change in the person having direct control of a company, fund or partnership which derives more than 50% of its value from Irish commercial property, and; It is "reasonable to consider" that the property was acquired to realise a gain from its disposal and the property is being developed with this as the main aim or it was held as trading stock by the target.   For share sales, where property is involved, real attention will now need to be paid to Irish Revenues' meaning of "reasonable to consider," if a purchaser is seeking to secure the 1% rate.   

There have been mixed reactions to the hike from the players in the market, largely negative as to be expected, but with resigned acceptance from the bigger players due to the substantial recovery in the market.  An increase was expected and it is apparent that the hike has just been factored into the transaction costs.   The...

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