Revenue Note for Guidance

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Revenue Note for Guidance

Section 55 Procedure to apply where consideration, etc., cannot be ascertained

Summary

This section is similar to section 44 except that it refers to leases rather than conveyances.

Details

(2) Where both the rent and premium in a lease cannot be ascertained, and the lease would otherwise attract ad valorem stamp duty by reference to the amount of the rent or premium, stamp duty is to be charged on the notional premium that could be obtained by the lessor if a nil rent were chargeable under the terms of the lease.

Example

A leases his restaurant to his brother, B, for 5 years in consideration of a premium and a rent, both to be based on formulas linked to future profits and, accordingly, both unascertainable. The market value of the leasehold interest demised, if the rent were nil, would be €50,000. €50,000 is the chargeable consideration.

(1) Where either the rent or the premium cannot be ascertained stamp duty is chargeable on the market rent or the market premium, as the case may be.

Example 1

If in the example given in the commentary on subsection (2), the amount of the premium was stated in the lease as €10,000, and only the rent could not be ascertained, stamp duty would be charged, in addition to the premium, on the market rent that could be obtained for a lease of the premises for 5 years with a €10,000 premium.

Example 2

If in the example given in the commentary on subsection (2), the amount of the rent was stated to be €2,000 p.a., and only the premium could not be ascertained, stamp duty would be charged, in addition to the rent, on the market premium that could be obtained for a lease of the premises for 5 years with an annual rent of €2,000.

(3) This section does not apply to cases covered by section 53(4)(a). Section 53(4)(a) provides for a method of calculating duty on certain new houses and apartments where the price of the building work cannot be ascertained (the section provides for a multiple of 10 to be applied to the site value in such cases).

This section over-turns the contingency principle in so far as it related to leases.

Relevant Date: Finance Act 2014