Dáil Éireann Debate, Wednesday - 16 October 2019
92. Deputy Pearse Doherty asked the Minister for Finance the reason a stamp duty charge of 7.5% is not applicable in which a scheme of arrangement, in accordance with Part 9 of the Companies Act 2014, is used for the acquisition of a company. [42516/19]
Amharc ar fhreagraBudget 2020 introduced a measure to impose a stamp duty charge where the acquisition of a (target) company is effected by means of a particular type of scheme of arrangement under Part 9 of the Companies Act 2014, which came into effect on 9 October 2019 by way of financial resolution. This type of scheme of arrangement involves the (target) company entering into an arrangement whereby it cancels its existing shares and issues new shares to the acquiring company. The shareholders of the target company are paid for the cancellation of their shares rather than for the shares themselves. The usual stamp duty charge in respect of the sale or transfer of shares did not apply as this type of arrangement does not involve a conveyance or transfer on sale. In contrast, a takeover of the target company by means of the direct purchase or transfer of its shares would attract a stamp duty charge at the 1% rate that applies to share sales or transfers.
The new measure applies stamp duty at the rate of 1% on the value of shares that are cancelled as if an actual transfer of shares had taken place. It would not be appropriate to apply the stamp duty rate of 7.5%, which is the rate that applies to the sale or transfer of non-residential property, as the transaction is in substance the acquisition of a company’s shares which attracts a stamp duty charge at the rate of 1%.
