Investors hit by stamp duty

INVESTORS in Irish shares bear the brunt of the State’s annual 1.2 billion stamp duty haul, paying 28.75% of the duty compared to 22% paid by property purchasers.

The Department of Finance yesterday published the papers of the Tax Strategy Group (STG), an interdepartmental committee comprising senior officials and advisors from the Departments of Finance, Taoiseach, Enterprise Trade and Employment, Social Community and Family Affairs and the Revenue Commissioners.

The group says stamp duty is a significant source of revenue, raising €1.2bn in 2001. The transfer of all Irish registered company shares is subject to stamp duty of 1%.

The report says: “The rate of stamp duty is determined by reference to where the shares are registered, not by reference to where they are purchased.

"Thus, the amount of stamp duty payable on the transfer of shares of an Irish registered company will be the same whether the shares are purchased on the Dublin Exchange or on a foreign exchange.

“There is however an exemption from Irish stamp duty for the transfer of shares and securities of a foreign registered company.

"Therefore, in the case of UK equities traded in Ireland no Irish stamp duty is due, but such transactions are liable to 0.5% duty in the UK.”

The STG concedes the differential of 0.5% between Irish and British stamp duty renders British equities slightly more attractive, from a tax point of view, than Irish equities.

However, the STG argues the stamp duty is unlikely to deter investors from opting for Irish equities.