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CAPITAL TAXES – STAMP DUTY

Tax Strategy Group – TSG 18/09 10 July 2018

Tax Strategy Group | TSG 18/09 Capital Taxes - Stamp Duty

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STAMP DUTY Introduction 1. Total Stamp Duty collected in 2017 amounted to €1.2 billion which accounted for

approximately 2.36% of total tax receipts in that year. The total receipts for 2017 were

€50.76 billion.

Description of tax

2. Stamp Duty is generally a tax on documents or instruments. To be liable an instrument

must be listed in Schedule 1 to the Stamp Duties Consolidation Act 1999. It must also be

executed in Ireland or, if executed outside Ireland, it must relate to property situated

within Ireland or something done or to be done in Ireland. Some instruments may benefit

from an exemption or relief.

3. Stamp Duty chargeable in Ireland falls into two main categories.

The first comprises the duties payable on a wide range of legal and commercial

documents, including (but not limited to) conveyances of property, leases of

property, share transfer forms and certain agreements.

The second category comprises duties and levies payable by reference to

statements. These duties and levies mainly affect banks and insurance companies

and include a duty in respect of financial cards e.g. Credit, ATM, and Charge cards,

and levies on certain insurance premiums and pension schemes.

4. Some Stamp Duties are fixed e.g., Stamp Duty on credit cards, which is a set amount

irrespective of how much the card is used, while others are levied on an ad valorem basis,

i.e. according to value e.g., Stamp Duty at 1% on the value of shares transferred.

5. Stamp Duty is a self-assessment tax payable by the "accountable person" e.g. the

purchaser or transferee in the case of a transfer of property.


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6. The main Stamp Duties are on the following:

Residential property transactions - 1% on values up to €1m and 2% on any balance

over €1m

Non-residential property transactions - 6%1

Transfers of shares in Irish registered companies - 1%2

Financial cards:

- Credit cards – flat rate of €30 per year

- ATM only or debit only cards – 12c per ATM withdrawal, capped at €2.50 per

year

- Combined ATM/debit cards – 12c per ATM withdrawal, capped at €5 per year

Cheques or “Bills of Exchange” - 50c per cheque

Non-Life Insurance levy on premium income - 3%; there is also a non-tax “Insurance

Compensation Levy” of 2%

Life Insurance levy - 1%

Health Insurance levy - charge is per person insured and varies according to age

and the type of health insurance policy – this levy is transferred directly into the

Risk Equalisation Fund, rather than into the Exchequer

1For stamp duty purposes non-residential property includes: land (agricultural and non-agricultural); sites (other than sites

purchased with a connected agreement to build a house or apartment); commercial or business premises, including offices, factories, shops and public houses; options over land.

2 As of 5th June 2017 trading in shares of companies listed on the Enterprise Securities Market (ESM) of the Irish Stock

Exchange is exempt from the 1% Stamp Duty charge. Also see paragraphs 24-26 later in relation to were non–residential

property held by an entity including companies are indirectly sold by way of sale of shares in the company.


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Residential and Non Residential Property

Residential

7. Investment in building and construction grew by circa 4 per cent in Q3 and Q4 2017. The

quarterly National Accounts point to a continued expansion of investment activity in

construction. Underpinned by high demand and a supportive policy context, the ESRI

expects continued strong growth in home completions. The CSO has recently revised the

metric by which they measure new home construction. The new metric, which is a far

more accurate measure of new home completions, showed that completions increased

by 45.6% in 2017 compared to 2016.

8. Housing supply remains well below the levels needed to meet the demand from

demographic factors, including a rising population of household formation age and an

expected fall in headship rates.

9. In the year to April, residential property prices at national level increased by 13.0%. This

compares with an increase of 12.6% in the year to March and an increase of 9.5% in the

twelve months to April 2017 (CSO Residential Property Price Index April 2018 dated 13

June 2018)

10. According to the RTB, Rents increased nationally by 7.1% on annual basis in Q1 2018. The

RTB Rent Index for house rents stood at 104 in Q1 2018, 3 index points higher than the

pre-recession peak in Q4 2007, while the Index for apartment rents stood at 119 in Q4

2017, 11 index points higher than the Q4 2007 peak.

11. From 16 October 2008 to 6 December 2011, the following rates of stamp duty applied to

residential land and buildings. A number of reliefs and exemptions also applied including

an exemption for first-time buyers.


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TABLE 1 – STAMP DUTY RATES FOR RESIDENTIAL PROPERTY TRANSACTIONS 2008 TO 2011

CONSIDERATION RATE

LESS THAN €127,000 EXEMPT

FIRST €125,000 0%

NEXT €875,000 7%

EXCESS OVER €1,000,000 9%

12. The current stamp duty rates on residential land and buildings are 1% on the first €1

million and 2% on the excess over €1 million.

Commercial

13. The most recent evidence of activity in the Irish commercial property market indicates

that investment continues to expand in 2018. Looking at transactions of over €1 million in

value, market participants report transactions in the range of €930 million in the first

quarter of 2018, up 200 per cent on the first quarter of 2017. Transaction volumes are not

smooth from quarter to quarter and so strong inference of full year volumes should not

be based off quarterly results. Notwithstanding this proviso, transaction volumes in the

year to date indicate that the change in the rate of stamp duty has had a limited impact

on commercial property investment and the background to this is outlined later.

14. Other counterweighting influences on activity such as economic growth, interest rates

and overall confidence in the Irish economy appear to be having a far greater impact on

investment levels. Looking forward to the rest of the year, expectations among market

participants are for overall transaction levels of properties worth €1 million or more to be

broadly similar to 2017.

15. Both CBRE and JLL reported a strong opening quarter to 2018 for the commercial property

market. Office take up in Dublin in Q1 2018 reached approximately 83,000m2 which was

up more than 60% on Q1 2017. In Dublin, 274,000m2 of office space is due to be


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completed in 2018 of which 52% is already let or reserved. The majority of this demand is

emerging from the expansion of existing occupiers. JLL conclude that with a healthy

pipeline of new stock coming online and evidence of strong demand there is reason for

continued optimism. Investment in the Irish market continues to expand. Both CBRE and

JLL report that €930 million of commercial property was traded in Q1 2018 (accounting

only for transactions of over €1 million in value). This is up 200% on the volumes

transacted in Q1 2017 and reports suggest that this figure was buoyed by a number of

significant transactions. This evidence points to a resilient commercial real estate market,

which has shouldered the increase in stamp duty introduced in Budget 2018 and the

economic rationale underpinning it.

Build to Rent

16. Build to Rent (BTR) is a type of private rental accommodation, where typically, a whole

block of apartments is built or bought by a single entity with the intention of leasing all

units over the long term. The draft update to the ‘Sustainable Urban Housing: Design

Standards for New Apartments Guidelines for Planning Authorities’ defines BTR as:

Purpose-built residential accommodation and associated amenities built specifically for

long-term rental that is managed and serviced in an institutional manner by an

institutional landlord.’

17. A review by agent Hooke & MacDonald forecasts that there will be more than €500 million

worth of transactions in the BTR residential market in 2018. It is reported that the

residential investment market is expected to rise to 20% of all investment sales in 2018.

18. After the economic crisis many unoccupied apartment schemes became available.

Investors spotted the opportunity to buy these blocks at very attractive yields and the BTR

sector rose to account for over 12% of total investment in 2012 and 2013.

19. Although a new trend for Ireland, in many other places (the US, Scandinavia, the UK and

Germany) the residential sector attracts investment from funds, property companies,


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REITS and other such investors who buy primarily for the income return with the potential

for capital growth.

20. Nearly €1bn has been spent on BTR assets in Ireland between 2012 and 2015 with almost

6,000 units sold. Of these 95% have been in Dublin, meaning that approximately 11.5% of

all residential units sold in the Irish capital from 2012-2015 were traded in BTR blocks.

Declining affordability has displaced housing demand from owner occupation to the

rented sector in recent years. As such rents are rising and yields now offer a compelling

spread over bonds, fuelling the demand for BTR investments.

21. Savills report that investment in multi-unit developments as a whole continues to expand,

however in the last two years there has been a marked shift in the approach of investors

purchasing multi-unit developments. In the earlier years of the economic recovery

investors were able to buy whole, or nearly whole, developments that were initially built

for sale as individual units. This stock has now been largely bought up – with a decline in

secondary unit sales to investors from €260 million in 2016 to €113 million in 2017.

Larger investors are increasingly looking at Build-to-Rent opportunities or forward-

purchase agreements as a way to invest in the residential market. There was over €220

million worth of forward-purchase agreements made in 2017, with a number of Build-to-

Rent developments also initiated.3

22. While some commentators suggest that such investments can outbid potential traditional

owner-occupied buyers, others suggest that this increasing trend will help to satisfy pent-

up demand for rental properties. There is a need to continually assess what impact this

trend may have on developments in residential property prices and rents.

23. The Department will monitor the anti-avoidance measures introduced in Finance Bill

2017 in relation to non-residential stamp duty to see if they have caused a shift from other

3 http://pdf.euro.savills.co.uk/ireland-research/investment-brochure-final.pdf


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types of commercial property towards Build to Rent investments. As always, we will

consider if it is necessary to propose measures where sectoral residential supply is

disproportionately affected.

The rationale for the Stamp Duty Increase on Non Residential Property

24. A number of commentators, including the ESRI, had drawn attention to the recent sharp

increase in investment in construction activity and the risks that this could, left unchecked,

give rise to overheating in the sector and in the domestic economy generally. The IMF had

also called for “close attention” to the upswing in Irish commercial property.

25. In particular, investment in “other building and construction” (essentially construction

investment minus housing and improvements) had expanded rapidly over recent years.

The Department’s forecasts at budget time suggested that this category of building

investment as a share of GNI* would amount to some 8.2 per cent in 2017, in excess of

the long-term average (1985 to 2016) of 7.1 per cent.

26. In 2016, the IMF suggested that pressures in the commercial market needed to be closely

monitored and policy tools activated if risks to financial stability emerge, and to "future-

proof" the economy against boom-bust dynamics.

27. It was considered important to ensure that the building and construction sector remains

able to meet the demand for new housing while avoiding overheating in the sector as a

whole. It is also essential to avoid a situation where the economy becomes overly

dependent on the construction sector. These considerations suggested the need for

policy measures that would incentivise a re-balancing of activity away from non-

residential, commercial construction activity in favour of residential activity.

28. The rate of stamp duty applying to non-residential property (for transactions exceeding

an aggregate consideration of €80,000) was 6% between January 1997 and December

2011. In December 2011, a flat rate of 2% on all transaction values.


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29. This low, flat rate was introduced at a time when activity levels were very low and can be

viewed as a departure from the much higher rates that applied over the preceding

fourteen years and one justified by the exceptionally difficult market situation and lack of

commercial output that applied at the time of its introduction. With the CRE market now

performing strongly, the disjoint between available yields and overall viability

considerations as between the residential and commercial sectors, and given the policy

desirability of re-balancing construction activity towards residential investment and

avoiding overheating in the construction sector, the Minister considered it appropriate to

increase the rate of stamp duty applying to non-residential property.

Budget and Finance Bill changes

30. In the Budget 2018 statement the Minister for Finance announced an increase in the

stamp duty rate for all non-residential property transactions, including agricultural land,

from 2% to 6%.

31. For stamp duty purposes non-residential property includes: land (agricultural and non-

agricultural); sites (other than sites purchased with a connected agreement to build a

house or apartment); commercial or business premises, including offices, factories, shops

and public houses; options over land.

32. The following table (Table 2) provides details of the Stamp Duty Receipts from 2013-2017.


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TABLE 2 – STAMP DUTY RECEIPTS FROM PROPERTY

TRANSACTIONS 2013 TO 2017

PROPERTY: 2013 2014 2015 2016 2017

MILLION

RESIDENTIAL €65.51 €101.77 €123.45 €131.84 €175.26

NON-RESIDENTIAL €86.85 €173.28 €177.64 €255.92 €202.96

TOTAL €152.36 €275.05 €301.09 €387.76 €375.86

33. The yield up to end May 2018 is €228.78 million of which €61.77 million relates to

residential properties and €167.01 million relates to non-residential properties.

34. Budget 2012 reduced the rate of Stamp Duty on non-residential property from up to 6%

to 2% with effect from 6 December 2011, and it remained at this level until the changes

introduced in Budget 2018.

35. Section 60 of Finance Act 2017 gives effect to a number of measures announced in Budget

2018 including the increases the rate of stamp duty from 2% to 6% for conveyances and

transfers of non-residential property.

36. As the increase in stamp duty came into effect from the 10th October 2017 (Budget night)

before the Finance Bill was passed, the increase was made subject to transitional

measures for the retention of the 2% rate in cases where the property acquisition had

reached an advanced stage. The transitional measures applied stamp duty at a rate of 2%

on instruments that were executed before 1 January 2018 where there was a contract in

place before 11 October 2017 that was binding on the parties to the contract and the

instrument contains a certificate to this effect. More detail are available on the Revenue

brief 94/2017.


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Refund scheme

37. Section 61 of Finance Act 2017 provided for a stamp duty refund scheme in relation to

non-residential land purchased for the development of housing.

38. The refund scheme was intended to incentivise residential development and designed to

ensure that only those builders and developers who provide completed housing units

within a reasonable period of time can qualify for a refund. The refund is the difference in

the amount of stamp duty payable at the rates of 2% and 6%. The refund scheme applies

to both one-off houses and to larger housing developments. In the case of larger housing

developments, there is a requirement for the efficient use of a site in that a specified

proportion of the site must be developed for housing. It will be possible to develop a part

of a site for non-residential purposes as long as this does not compromise the required

amount of residential development for the site as a whole. It will also be necessary for

developers to submit a commencement notice to a local authority and for construction

operations to be commenced within the period of 30 months immediately following the

acquisition of the land.

39. To ensure the efficient use of sites for residential development, a certain proportion of a

site will have to be developed for housing. There are two alternative tests to be satisfied

in this respect. Either at least 75% of the area of a site must be occupied by housing or the

gross floor space of the housing units constructed must account for at least 75% of the

area of a site. These alternative tests will ensure that both low-rise and multi-storey

apartment buildings will be included. In the case of one-off houses constructed on a site

that exceeds one acre, the refund will only apply to the stamp duty attributable to an acre.

40. A phase of a development, must be completed within two years of being commenced.

The test for completion relates to the certificate of compliance that must be submitted to

a local authority when development is completed. When development is not completed

within this two year timeframe, or where the relevant 75% ‘substance’ test is not satisfied,

a developer will have to repay the refunded stamp duty to Revenue together with interest

calculated from the date on which the refund was made.


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41. The refund scheme is also time-bound. To be eligible for a refund, construction must

commence on a one-off house, on a housing development or on a phase of a housing

development before the end of 2021 and be completed within two years of

commencement. This means that the latest date for the completion of development will

be the end of 2023.

42. The refund scheme is administered by Revenue on a self-assessment basis. However, as

happens in relation to the administration of the general tax assessment and collection

system, Revenue will carry out compliance checks to ensure that refunds have been

correctly claimed and that any follow-up conditions for the relief have been satisfied.

Standard interest and penalty provisions are being applied in the case of incorrectly

claimed refunds and false declarations.

Anti-avoidance measure

43. Section 62 of Finance Act 2017 inserts a new section (31C) into the Stamp Duties

Consolidation Act 1999 for the purposes of preventing tax avoidance.

44. The rate of stamp duty on non-residential property was increased to 6% on Budget Day,

this rate applies in relation to all relevant conveyances executed after midnight on 10

October 2017.

45. This measure is intended to ensure that the new 6% rate will also apply where non-

residential property held by an entity such as a company is indirectly sold by way of a sale

of the shares in the company and effectively, the company itself.

46. The rate of stamp duty on non-residential property is now 6% while the rate applying to

the sale of shares is just 1%. Without change, this stamp duty rate differential would have

provided an incentive for parties involved in large property deals to seek to structure

transactions in a way that would have avoided the 6% rate. The measure also targets

partnerships and certain investment undertakings used for collective investment

purposes which hold a significant amount of Irish property or interests in Irish property.


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The measure is essentially aimed at entities that deal in land or that develop land for non-

residential purposes.

47. Not all entities deriving value from property are affected. For example, a hotel business,

a car park business or an office rental business might be carried on by a company.

Although the greater part of the value of such businesses might be attributable to their

property assets, the sale of such companies by way of a sale of their shares will continue

to be chargeable to stamp duty at the rate of 1% because they will not have acquired or

developed the property with the sole or primary aim of making a profit or gain from its

disposal but from using the property for its core business.

Stamp Duty reliefs and agriculture 48. For stamp duty purposes non-residential property includes land (agricultural and non-

agricultural). This section considers stamp duty in the context of agricultural land.

Consanguinity relief

49. Consanguinity Relief only applies to transfers of worked land between related parties,

which includes lineal descendants, civil partners, civil partner of a parent and adopted

children. Prior to the 2018 Budget, Consanguinity Relief reduced stamp duty by 50%, from

the then stamp duty rate of 2% to 1% on agricultural lands. The relief was due to expire

on the 31st of December 2017 but has now been extended for a further three years, to

31st December 2020. Under the Finance Act, 2017 for farm transfers between related

parties, stamp duty on the said transfer will continue to be charged at 1% as opposed to

the increased Stamp Duty rate of 6%.

50. Prior to the introduction of The Finance Act, 2017 to qualify for Consanguinity Relief, the

owner or transferor of the lands had to be under 67 years of age, for the relief to apply.

The 2017 Act, abolished the age limit for the transferor. However, the transferee being

the person or persons taking the lands, must all be under 67 years of age to qualify for the

relief.


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51. There are a number of other conditions that must be complied with for the relief to apply,

including that the individual to whom the land is conveyed or transferred must either farm

the land for a period of six years or lease it for a period of not less than six years to an

individual, who will farm the land. There is also a requirement that the person taking on

the land must have an specified qualification or obtain same within four years from the

date they get the lands, or spend at least 50% of his/her time farming the lands. The lands

must be farmed on a commercial basis with the intention of making a profit from same.

52. Where the various terms and conditions of the relief are not complied with, the transferee

no longer qualifies for the relief. In those circumstances, the transferee must amend

his/her Stamp Duty Return to remove the relief and pay the additional Stamp Duty and

any interest due to Revenue.

53. This relief is designed to encourage farmers who are of retirement age to transfer their

land to a son or daughter or other close relative who will be better able to farm the land

productively.

54. The cost of this relief in 2017 was €3.81 million

Long-term land leasing

55. Budget 2015/and section 74 of Finance Act 2014 introduced Section 81D of the Stamp

Duties Consolidation Act 1999. This section was introduced to encourage the long-term

leasing of land to active farmers. The section provides for relief from Stamp Duty on long-

term (6 to 35 years) leases of farm land. The relief is available where the land is used

exclusively for farming on a commercial basis carried on by the lessee for at least 50% of

his or her normal working time, or who holds, or within 4 years of the date of the lease

will hold, an eligible agricultural qualification.

56. Section 65(2)(c) of Finance Act 2017 introduced an amendment that allows Revenue to

provide information to the Minister for Agriculture, Food and the Marine in relation to an

exemption from stamp duty to leases on farmland. This information is required for


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compliance with EU Regulations in line with de minimis State Aid rules., and is designed

to allow for the commencement of Section 81D of the Stamp Duties Consolidation Act

1999.

57. Following the Minister signing a Commencement Order (S.I. No. 185 of 2018) this relief

comes into effect on 1 July 2018.

Farm consolidation

58. Section 67 of Finance Act 2017 introduced a measure to allow a farmer to claim relief from

stamp duty where he or she sells land and purchases land, in order to consolidate his or

her holding.

59. For the relief to operate, there must be both a sale and a purchase of land within a period

of 24 months of each other. Where other qualifying conditions are satisfied, stamp duty

will only be paid to the extent that the value of the land that is purchased exceeds the

value of the land that is sold. A reduced rate of 1% will be charged on the excess, if any,

of the purchase value. If the sale takes place before the purchase, then relief will be given

at the time of purchase. However, if the purchase takes place first, then stamp duty will

have to be paid but can subsequently be refunded when the sale takes place.

60. A number of qualifying conditions must be satisfied before the relief can apply, the most

important of which is that Teagasc, the semi-state body responsible for Agriculture and

Food Development, must issue a certificate stating that a sale and purchase or an

exchange of farmland was made for farm consolidation purposes.

61. A purchaser of farmland must retain ownership of the farmland for a period of five years

and must use the land for farming. Where any part of the land is disposed of before the

end of this five-year holding period, the stamp duty relieved can subsequently be

recovered by Revenue, or partly recovered as appropriate.


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62. The relief will apply in relation to instruments conveying or transferring land that are

executed on or after 1 January 2018 and on or before 31 December 2020.

63. This measure is subject to European Union State Aid rules and could not be commenced

until approval was received from the EU. There is no age limit for Farm Consolidation

Relief.

64. This relief will be commenced on 1 August 2018.

Young Trained Farmers

65. In Finance Act 2015, Young Trained Farmers relief, which was due to expire on 31

December 2015, was extended for a further three years to 31 December 2018. Stamp

Duty is not payable where land is conveyed or transferred to the holder of approved

qualifications who is under 35 years and who farms the land, for not less than 50% of his

or her normal working time, for a period of not less than 5 years from the time the land is

conveyed or transferred.

66. The relief is due to expire on 31 December 2018.

67. The Agri-taxation Review was published as part of Budget 2015 and set out the main policy

objectives for continuing support to the sector through agri-taxation measures including

“Assisting succession and the transfer of farms”. The age profile of Irish farmers is

increasing and it is recognised that there are many social and economic reasons why

succession management is a challenge for farmers. Assisting succession and the inter-

generational transfer of farms has been a central part of the Government’s agri-taxation

policy and Budget 2015 included a number of measures to maintain and strengthen that

support, specifically the retention of Agricultural Relief from Capital Acquisitions Tax,

Retirement Relief from Capital Gains Tax and the stamp duty exemptions on transfers of

land. There were a number of new measures to make these reliefs more effective,

including targeting Agriculture Relief at active and trained farmers. The commencement


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of the ‘Succession Farm Partnership Scheme’ last year was a significant addition to the

measures supporting succession and the transfer of farms.

68. Recommendation 14 of the Agri-taxation Review stated that the current stamp duty

exemptions on transfers of land should be retained, including the Stamp Duty Exemption

on Transfers of Land to Young Trained Farmers. Indecon’s analysis suggests that where

stamp duty relief encourages land mobility to younger active farmers it is likely to result

in increased output levels in the sector.

69. The Stamp Duty Exemption on Transfers of Land to Young Trained Farmers is an integral

part of the package of measures assisting succession and the transfer of farms. Its renewal

is crucial to the policy objectives of the Agritaxation Review and to the continued

sustainable development of the sector as per Food Wise 2025.

70. The cost of extending this relief is estimated at €24 million per annum. The Department

will consider whether the scheme should be extended.

Stamp Duty on Share Transfers

71. The Stamp Duty yields from share transactions in the years 2011 to 2017 are as follows:

TABLE 3 – STAMP DUTY ON SHARE TRANSFERS RECEIPTS 2011 TO 2017

SHARES 2011 2012 2013 2014 2015 2016 2017 2018

MILLION.

TOTAL 194.76 171.46 251.44 282.30 424.13 388.66 449.0 192.31

72. The yield to end May in 2018 is €192.31 million (provisional Revenue figures) which is

€29.20 million or 17.9% ahead of receipts for the same period in 2017.

73. As there has been no change in the rate of this Stamp Duty, the growth in receipts over

recent years would be strongly indicative of increasing volumes of trade and or share


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values within a recovering economy. However, the Department will monitor if the anti-

avoidance measure outlined in paragraphs 24 and 25 above is impacting on receipts.

74. The Irish Stock Exchange (ISE) has been lobbying for a number of years for the removal of

the Stamp Duty on share transactions, or, at a minimum, that the rate should be in set

line with the UK rate (currently 0.5%). In the document entitled “Getting Ireland BREXIT

Ready” published in conjunction with Budget 2017, the Minister for Finance announced

that a review would be undertaken during 2017 of the application of Stamp Duty to stocks

or marketable securities of an Irish incorporated company in the context of the

sustainability of the yield and the future UK relationship with the EU.

75. Following from this, the Department of Finance launched a review and associated public

consultation under the title ‘Review of the Application of Stamp Duty to Stocks and

Marketable Securities of Irish Incorporated Companies’ in September 2017.

76. The objective of the review and the associated public consultation was to examine the

rationale for retaining stamp duty on share transactions in its current form in the context

of a changing financial and economic environment. Any changes that might be introduced

in this area would be designed to encourage the development of businesses listed on the

Main Securities Market of the Irish Stock Exchange. In approaching this issue, the potential

impact that any such change may have on the Irish economy has also been borne in mind.

77. A report, which summarises the outcome of the public consultation, and outlines a

number of options which could be pursued in this matter, will be considered by the

Minister for Finance very shortly.

78. The report, as well as summarising the issues surrounding this particular stamp duty,

summarises the responses to the public consultation, and outlines three (non-exclusive)

possible courses of action that the Minister may wish to consider:

Retain the status quo (a 1% stamp duty on most share transactions)

Reduce the 1% to 0.5% to bring in into line with the current UK rate


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Reduce the 1% to 0% as a competitiveness measure, whilst retaining the option

to increase the rate at some future point.

79. If either if the second and third options are accepted, the reduction in revenue collected

will have be collected in alternative mechanism in order to maintain total revenue.

Other categories of Stamp Duty THE YIELD FROM OTHER CATEGORIES OF STAMP DUTY IN RECENT YEARS IS SET OUT IN THE TABLE BELOW.

TABLE 4 – OTHER CATEGORIES OF STAMP DUTY RECEIPTS 2012 TO 2018

STAMP

DUTY

2012 2013 2014 2015 2016 2017 PROVISIONAL

JAN – MAY

2018*

€MILLION

CREDIT

CARDS

51.6 49.62 45.85 46.68 46.60 29.72 15.17

ATM ONLY

AND DEBIT

ONLY

1 1 0.6 0.74 0.52 0.29 0.06

COMBINED

ATM/DEBIT

CARDS

15.5 17.33 18.16 17.39 22.61 9.74 6.99

CHEQUES 30.9 25.32 27.42 24.42 20.59 18.26 6.23

NON-LIFE

INSURANCE

104.1 98.73 103.35 €107.95 135.67 180.42 83.01

LIFE

ASSURANCE

24.1 25.4 27.85 30.7 21.37 12.42 6.09

HEALTH

INSURANCE

436.7 585.51 581.71 641.53 641.63 683.76 434.96

PENSION

FUNDS

482.8 535.31 742.88 169.31 0.43 0.06 0

*Based on previous years, larger receipts for the individual Stamp Duty tax-heads are received from June/July to December.


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The Health insurance levy

80. The Health insurance levy has been paid into the Risk Equalisation Fund since 2013.

81. In autumn each year the Department of Health receives an annual analysis of the market

from the Health Insurance Authority (HIA), outlining, among other items, the Stamp Duty

levies required to fund the level of risk equalisation for the following year, taking into

account the changing demographic profile of those insured and other market

developments.

82. Following consultation with the Minister for Finance, the Minister for Health proposes

revised credits and makes a recommendation for the corresponding Stamp Duty levies to

the Minister for Finance. The revised risk equalisation credits and Stamp Duty levies are

enacted under health insurance legislation.

83. The Health Insurance (Amendment) Act 2017 set out the risk equalisation credits and

Stamp Duty levy applicable for 2018. The level of Stamp Duty for non-advanced products

for adults and children was reduced while the Stamp Duty for advanced products4

remains unchanged.

84. For 2018, the Minister for Health accepted the Authority's recommendation of no change

in the Stamp Duty on advanced contracts for adults and a decrease of €44 for non-

advanced contracts for adults. The revised rates apply to contracts that are renewed or

entered into from 1 April 2018.

4 A contract that provides health insurance cover of not more than 66% of the full cost for hospitals charges in a private hospital (or minimum benefits if greater) is a non-advanced cover contract. All other contracts are advanced cover contracts.


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85. The Department of Health will receive the HIA’s annual analysis of the market in autumn

of this year, at which point they will seek the Minister’s approval for 2019 Stamp Duty

rates and to publish a new Health Insurance (Amendment) Bill.

Other Developments

86. In Budget 2016 the Minister announced the abolition of the flat €2.50/€5 per annum

charge on ATM cards and combined (ATM & debit) cards and the introduction of a new

12c per ATM withdrawal fee from 1st January 2016, which is capped at €2.50/€5 per

annum per card.

87. This measure was introduced in conjunction with a range of other initiatives, some by the

financial sector itself, with the objective of enhancing the efficiency and cost effectiveness

of payment systems and reducing the usage of cash and cheques in Ireland. The impact of

the various measures will be kept under review.

88. Stamp Duty on pension funds expired at the end of 2015. The levy was introduced as a

means of funding the Jobs Initiative in May 2011. Since its introduction in the Finance (No.

2) Act 2011 it has yielded €2,394 million

Levies on insurance policies

89. The supplementary Budget in April 2009 introduced a new insurance levy at a rate of 1%

on all life assurance premium income commencing with the quarter ending on 30

September 2009.

90. The levy was introduced as one element of the Government's concerted effort to raise

revenue necessary to help address the serious decline in the public finances evident in

2009. It was understood that in common with other taxation measures, the operation of

the levy would be kept under review.


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91. A Stamp Duty of 3% applies on the gross amount received by an insurer in respect of

certain non-life insurance premiums. The exceptions are reinsurance, voluntary health

insurance, marine, aviation and transit insurance, export credit insurance and certain

dental insurance contracts. The 3% rate of duty applies to premiums received on or after

1 June 2009 in respect of offers of insurance or notices of renewal of insurance issued by

an insurer on or after 8 April 2009.

92. The yields from these levies in the period since 2010 are set out in Table 5

TABLE 5 – YIELDS FROM LEVIES 2010 TO 2017

Receipts 2011 2012 2013 2014

2015 2016 2017

€MILLION

NON-LIFE

LEVY 106.40 104.16 98.73 103.35 107.95 135.67 167.22

LIFE

ASSURANC

E LEVY

31.60 24.12 25.40 27.85 30.7 21.37 21.72

Issues for consideration Life assurance levy

93. The life insurance industry has been strongly opposed to the life assurance levy since its

announcement in the Supplementary Budget of 2009. They raise the following arguments

for its abolition:

Other more specialised forms of investment do not attract the life assurance levy

but can be subject to CGT, which is charged at 33%. In addition, investments

subject to CGT attract an annual allowance, can offset their losses and don't face

the 1% levy.

By investing directly in non-insurance savings and investments, clients can avoid

the levy.


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It is generally higher net worth individuals who can invest directly, obtain legal

and tax advice and fully utilise CGT losses.

Life assurance investments were traditionally an entry route for new or ordinary

investors to access investments in asset classes and areas which may not

otherwise be accessible to them. These categories and SMEs have been put off

by the levy, the industry maintains, and are investing directly themselves.

Many life assurance investments are subject to an exit tax of 41% and the

industry argues that removing the 1% levy and/or making amendments to the

rate of exit tax is likely to lead to an increase in business and an increase in exit

taxes paid.

Gender and Equality Implications

94. There are no specific gender or equality implications with regard to the tax issues in this

paper.

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