PART 2 CHARGING AND STAMPING OF INSTRUMENTS

Overview

Stamp duty is a duty charged on certain written documents (section 2). These documents are referred to as “instruments” in the stamp duty code. Not every instrument is liable to stamp duty. To be liable it must be listed in Schedule 1. It also must be either executed in the State or, if executed outside the State, it must relate to Irish property or to something done or to be done in the State.

Schedule 1 also contains the rate of duty, which may be ad valorem or fixed, applicable to each instrument. The Minister for Finance has the power to vary the rate of duty on certain instruments by regulation (section 3).

An instrument which is liable to stamp duty must be stamped within the time limits specified in section 2: otherwise interest for late payment will arise (section 14). The instrument must contain all relevant details and evidence relating to the facts and circumstances affecting the stamp duty liability must be retained for a period of 6 years (section 8). Once the duty has been paid to the Revenue Commissioners they will issue a Stamp Certificate in relation to the instrument to the value of the duty paid. Except where there is express provision to the contrary (see, for example, sections 5 and 10) the payment of stamp duty must be denoted by impressed stamps or by attaching a Stamp Certificate to the instrument (section 4) and these stamps must appear on the face of the instrument (section 6(1)).

A document may be liable to more than one charge to stamp duty: if it is, then it must be separately and distinctly stamped in respect of each one of the charges (sections 6(2) and 7).

Penalties are incurred for failure to disclose all relevant details regarding the stamp duty liability (section 8(4A)) and for the filing of an incorrect stamp duty return (section 8A). See also section 134A for penalties incurred by an accountable person.

The amount of stamp duty chargeable on a particular instrument may depend on the duty paid on another instrument. Where the duty chargeable on one instrument (Instrument A) is dependent on the duty paid on another (Instrument B) the Revenue Commissioners may denote on Instrument A the fact that ad valorem duty was borne on Instrument B (section 11).

Instruments which are duplicates of instruments chargeable to stamp duty must be impressed with a duplicate stamp (section 13).

The Revenue Commissioners may make regulations in relation to the operation of the e-stamping system (section 17A).

If the instrument recites an amount in a foreign currency and that amount is chargeable with ad valorem duty (e.g. the purchase price for a property may be recited in US$’s then that amount must first be converted into €’s. Section 9 sets out the rate of exchange to be applied in such cases.

Readers should also be aware that section 811 of the Taxes Consolidation Act, 1997, contains general anti-avoidance provisions. The purpose of section 811 is to nullify the effects of certain transactions which have little or no commercial reality but which are carried out primarily to avoid or reduce a charge to tax (including stamp duties). In addition, section 811A of the Taxes Consolidation Act 1997 provides for a surcharge and interest to be payable where a transaction is found to be a tax avoidance transaction under section 811 and also provides for a “protective notification” to be returned to the Revenue Commissioners by a taxpayer to protect the taxpayer against the surcharge and interest.

Section 2 Charging of, liability for, and recovery of stamp duty

Summary

Stamp duty is chargeable on any instrument which is listed in Schedule 1—

• if that instrument is executed in the State, or
• no matter where it is executed, if it relates to Irish property or to matters or things done or to be done in the State.

Details

Charge on instruments

(1) An instrument which is specified in Schedule 1 and which is executed in the State is chargeable to stamp duty. If the instrument is specified in Schedule 1 but is executed outside the State then the instrument is only chargeable to stamp duty if it relates to property situated, or matters or things done or to be done, in the State. The provision that an instrument which relates to anything done or to be done in the State is chargeable with stamp duty is capable of a very broad interpretation. The view of the Revenue Commissioners in relation to this criterion is that the instrument and/or the underlying transaction should relate to, or involve, a substantive action or obligation to be carried out or undertaken in the State. An illustration of this view would be where an instrument is executed abroad relating to foreign property where the only connection with the State is that one of the parties is an Irish resident. The Revenue Commissioners’ view is that in such a case the instrument would not be liable to duty.

In determining the appropriate head of charge for an instrument the Revenue Commissioners will look at the effect of the instrument rather than the description which the parties to it have given to it.

(2) Stamp duties are charged for the benefit of the Central Fund. The duties to be charged are specified in Schedule 1 and must be applied unless the instrument in question is exempted or relieved from duty by the Stamp Duties Consolidation Act, 1999, or any other Act (see Part 7 and Appendix 2).

Where the same instrument is liable to stamp duty in the United Kingdom and the State a measure of relief from double taxation is provided by the Double Taxation (Relief) (Order No. 1), 1923, in that it, inter alia, provides that such an instrument when stamped in one of those countries is, to the extent of the duty it bears, deemed to be stamped in the other country. The Order, which also extends to composition agreements (see section 5), was made under the provisions of the Double Taxation (Relief) Act, 1923¹.

Date payment is due

(3) Stamp duty must be paid on chargeable instruments within the specified time limit i.e. within 30 days after the date of first execution of the instrument. In most cases, an instrument will be “first executed” when it has been executed by all of the parties to it necessary to make it effective in law and that should be the date that is inserted in the instrument - “execution” is defined in section 1. In the case of an instrument held in escrow the time for stamping only arises when the outstanding condition has been performed and the instrument is released from escrow. The Revenue Commissioners will always require evidence of the existence of escrow which should include such details as the date the deed went into escrow, the reason it went into escrow and the date it came out of escrow (e.g. certificate of escrow).

These time limits do not apply, of course, when the instrument is written on material which is already duly stamped.

Accountable person

(4) Where no duty, or insufficient duty, is paid the accountable person becomes liable to pay it. If there is more than one accountable person then each accountable person becomes liable jointly and severally to pay the duty. “accountable person” is defined in section 1: however, sections 31(1), 36(2), 71(a) and 130 are also relevant as is section 4(1) of the Stock Transfer Act, 1963.

Recovery of duty and penalties

See Chapters 1A, 1B, 1C, and 1D of Part 42 of the Taxes Consolidation Act 1997 in relation to recovery of duty (including surcharge, clawback, interest and penalties) that become due and payable on or after 1 March 2009. The use of powers of attachment (section 1002 of the Taxes Consolidation Act, 1997) also applies to stamp duty.

Penalties, surcharges, clawbacks and interest are provided for in sections 5(4), 8(3) and (4A), 8B, 10(4), 14(1), 14A, 25(2), 45A(4), 59(1), 65, 66(2), 75(3) and (5), 76(2) and (3), 79(7), 80(8), 80A(8), 108A(4), 117(3), 123(7), 123A(7), 123B(7), 124(5)(b), 125(6), 126(7), 126A(10), 128, 128A, 128B, 129(1) and 134A. The Revenue Commissioners have a general power to mitigate penalties under section 35 of the Inland Revenue Regulation Act, 1890, and section 1065 of the Taxes Consolidation Act, 1997 – section 133 applies section 1065 to stamp duty.

Relevant Date: Finance Act 2014