Revenue Note for Guidance

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Revenue Note for Guidance

Section 75 Relief for intermediaries

Summary

This section replaces the “old” section 75 containing “broker/dealer relief” and provides for a new relief for intermediaries for instruments of transfer executed on or after 1 October 2007. See Commencement Order entitled “Finance Act 2007 (Commencement of section 109) October 2007” (S.I. No. 649 of 2007).

Details

(3) The core provision of the new section 75 is in subsection (3). This subsection grants an exemption from stamp duty on the transfer of securities to a person or a person’s nominee, where—

A. the person is a member firm of an exchange/market,

B. the person is an intermediary and is approved by the Revenue Commissioners as a recognised intermediary in accordance with arrangements made by the Revenue Commissioners with the exchange or market,

C. the transfer of securities is effected either—

  • on the exchange or market in respect of which the intermediary is a recognised intermediary, or
  • on any exchange or market operated by the Irish Stock Exchange Limited (e.g. the ISE Main Market and IEX) or the London Stock Exchange plc (e.g. LSE Main Market and AIM), or
  • on any other exchange or market designated by the Revenue Commissioners for this purpose in regulations, and

D. the transfer is not effected in connection with an excluded business.

(1) & (2) The concepts used, in each of these requirements, are defined/interpreted in subsections (1) and (2) of the new section 75. Subsection (1) also includes some consequential definitions. The requirements at A, B, C and D above, are explained as follows:

A. the person is a member firm of an exchange/market

(5) “Member firm” means—

  • a member of the Irish Stock Exchange Limited,
  • a member of the London Stock Exchange plc, or
  • a member of such other exchange/market1 that is designated for this purpose by the Revenue Commissioners in regulations, that they are empowered (under subsection (5)), to make.

B. the person is an intermediary and is approved by the Revenue Commissioners as a recognised intermediary in accordance with arrangements made by the Revenue Commissioners with the exchange or market

An “intermediary” means a person who carries on a bona fide business of dealing in securities. The entering into derivative agreements referenced directly or indirectly to securities is treated, for the purposes of the definition of “intermediary” as the carrying on of a business of dealing in securities. The purchase of securities to hedge these derivative agreements would be considered as part of the carrying on of that business.

C. the transfer of securities is effected either—

  • on the exchange or market in respect of which the intermediary is a recognised intermediary, or
  • on any exchange or market operated by the Irish Stock Exchange Limited (e.g. the ISE Main Market and IEX) or the London Stock Exchange plc (e.g. LSE Main Market and AIM), or
  • on any other exchange or market designated by the Revenue Commissioners for this purpose in regulations

A transfer of securities is effected on an exchange/market if—

  • it is subject to the rules of the exchange/market, and
  • it is reported to the exchange/market, in accordance with the rules of that exchange/market.

Thus, for example, where a member firm of the ISE is an intermediary and is approved by the Revenue Commissioners as a recognised intermediary in accordance with arrangements made by the Revenue Commissioners with the ISE, that member firm can, where appropriate, claim an exemption from stamp duty on a transfer of Irish securities to it even if that transfer is effected on the LSE or on another exchange or market designated by the Revenue Commissioners for this purpose.

Transfers of shares executed on or after 1 November 2007 which are required by a competent authority (e.g. IFSRA), in accordance with the EU Markets in Financial Instruments Directive (MiFID) to be reported directly or indirectly to the competent authority are deemed to satisfy the “effected on exchange/market” condition of the exemption above, subject to all other conditions being satisfied.

D. the transfer is not effected in connection with an excluded business carried on by the intermediary

For an exemption from stamp duty to be available to an intermediary on any particular transfer of securities, it is necessary that the securities are not being acquired in connection with various business activities termed “excluded business”. That does not mean that the intermediary cannot engage in such business. However, any transfer in connection with such business is not exempt from stamp duty.

An excluded business means any business which—

  • consists in the making or managing investments,
  • consists in providing services for connected persons,
  • consists in insurance business, or assurance business,
  • consists in administering, managing or acting as trustee in relation to pension business,
  • consists in operating or acting as trustee in relation to collective funds.

1 Plus Markets PLC (and the markets operated by it), POSIT (operated by Investment Technology Group Limited), SWX Europe Limited (formerly known as virt-x Exchange Limited), Eurex Deutschland, Chi-X Europe Limited, Turquoise Services Limited, Nasdaq OMX Europe Limited, PLUS – Europe operated by Bayerische Borse AG, Bats Trading Limited, SmartPool Trading Limited, NYSE Arca Europe, Pipeline Financial Group Limited, Euro Millennium operated by NYFIX International Limited, and Baikal MTF operated by Baikal Global Limited, Börse Berlin AG and NX MTF (operated by Nomura International plc) have been designated by the Revenue Commissioners as exchanges/markets for the purposes of the relief (See S.I. No. 651 and 677 of 2007, S.I. No. 156, 321 and 468 of 2008, S.I. No. 46, 99, 184 and 331 of 2009, S.I. No. 53 and 168 of 2010)

Relevant Date: Finance Act 2014