Dáil Éireann debate -
Wednesday, 6 Oct 1993

Vol. 434 No. 2

Written Answers. - Charging of Stamp Duty.

Dermot Ahern

Question:

130 Mr. D. Ahern asked the Minister for Finance if his attention has been drawn to a recent change in practice by the Revenue Commissioners whereby in certain commercial transactions involving a stamp duty imposition, not only is stamp duty charged at the appropriate rate based on the consideration passing but is also charged on any VAT element payable on the transaction which is, in effect, a tax on a tax; if the Revenue Commissioners are justified in doing this and have the authority to do so; and if he will make a statement on the matter.

Minister for Finance (Mr. B. Ahern)

There has been no change in the Revenue Commissioners' practice in relation to the charging of stamp duty on immovable property which is subject to VAT. Stamp duty is levied on the total consideration paid by a purchaser to a vendor in respect of chargeable transactions. Where VAT is payable on a property transaction that is subject to stamp duty, the amount of VAT payable forms part of the consideration on which duty is levied, just as, for example, any PAYE or PRSI costs included in the purchase price of the property would form part of the consideration for stamp duty purposes.

Property transactions which give rise to a charge to VAT and stamp duty are generally those where the property is developed and sold in the course of the vendor's business and the property does not qualify for an exemption from stamp duty (new houses or apartments with a floor area not exceeding 125 square metres are exempt from stamp duty).

I am satisfied that the practice followed by the Revenue Commissioners in this area is appropriate and in accordance with existing legislation. However, there appears to be some uncertainty in the legal and accountancy professions as regards the interaction of stamp duty and VAT and I understand that the Commissioners are preparing a Statement of Practice which will clarify the issues and procedures involved. It is hoped that this statement will be available in the near future.