Introduction Section 79 SDCA 1999 provides full relief from stamp duty for transfers of property between bodies corporate that are associated to the required degree and subject to meeting certain other conditions. The purpose of this article is to explain in a practical manner how the relief operates.
Test Of Association The parties to a transaction must be associated at the time of execution of the relevant instrument to the following extent:
one body corporate is the beneficial owner of not less than 90% of the issued ordinary share capital of the other body corporate; or a third body corporate is the beneficial owner of not less than 90% of the issued ordinary share capital of both. The qualifying relationship may be established directly or indirectly through another body corporate or other bodies corporate or partly directly and partly through another body corporate or other bodies corporate.
A transfer of assets from B Ltd to A Ltd (or vice versa) or from C Ltd to A Ltd (or vice versa) would come within paragraph (a) above. A transfer of assets from B Ltd to C Ltd would come within paragraph (b) above.
A transfer of assets from C Ltd to D Ltd would come within the test of association as the necessary degree of qualifying relationship is established through A Ltd partly directly and partly indirectly.
However, a transfer of assets from F Ltd to any of the other group members (other than E Ltd) would not qualify because it would not be possible to establish a qualifying relationship with any of those companies (other than E Ltd).
In addition, the shares must carry the entitlement to at least 90% of the profits available for distribution and 90% of the assets available for distribution on a winding-up. The phrase "ordinary share capital" excludes fixed-rate preference shares. The 90% threshold is calculated on the nominal value of the relevant shares (i.e. any premium paid on the shares is ignored) (Canada Safeway v IRC  1 AER 666).
The relief is not restricted to Irish companies and is available to foreign bodies corporate meeting the terms of the relief. However, some foreign bodies corporate may not have a share capital structure, and this can cause problems where the qualifying association is sought to be traced though such a body corporate. The Revenue Commissioners are prepared to grant relief in such cases where the body corporate has a capital structure that is equivalent to a share capital structure and the other conditions of the relief are met. In such a case it would be prudent to seek confirmation in advance from the Revenue Commissioners that the body corporate's capital structure would satisfy this requirement.
The 90% relationship must be in existence at the time of execution of the instrument on which relief is claimed. Relief will not be available where the instrument causes the 90% relationship to come into existence.
Ceasing To Be Associated Section 79(7) SDCA 1999 provides that the relief will be withdrawn where the transferor and transferee cease to be associated to the required degree within a period of two years from the date of execution of the instrument on which relief is being claimed. In such cases the stamp duty becomes payable by the accountable person from the date on...