Revenue Note for Guidance

The content shown on this page is a Note for Guidance produced by the Irish Revenue Commissioners. To view the section of legislation to which the Note for Guidance applies, click the link below:

Revenue Note for Guidance

Section 87A Stock repo

Summary

Stock repo transactions are similar in nature to stock borrowing transactions referred to in Section 87 above. A stock repo transaction is one in which a repo seller agrees to sell stock to a repo buyer for a cash price on the basis that at the end of the fixed financing period the repo seller will buy back equivalent stock at a price equal to the original price plus interest.

The purpose of this section is to exempt from stamp duty the stock transfer from the repo seller to the repo buyer in pursuance of a repurchase agreement and the stock return from the repo buyer to the repo seller.

Details

(1) “repo seller” and “repo buyer” covers bodies/entities such as companies and other corporate bodies, building societies, pension funds, charities, unit trusts, investment limited partnerships, collective investment funds, member firms of any recognised stock exchange, market makers recognised as such by any recognised stock exchange, authorised investment business firms within the meaning of the Investment Intermediaries Act, 1995 and persons acting in a nominee or trustee capacity for any of the above bodies/entities.

(2) “equivalent stock” and “stock return” are self-explanatory.

The following are exempt from stamp duty:

  • stock transfer to repo buyer from repo seller, and
  • stock return to repo seller from repo buyer.

(3), (4) If equivalent stock is not repurchased by the repo seller within 12 months (applies to stock transfers executed on or after 25 March 2005 – previously it was 6 months) from the date of the stock transfer then—

  • the repo buyer will become liable to pay full ad valorem stamp duty on the stock transferred to the repo buyer by the repo seller;
  • the repo buyer will have to pay the duty within 14 days after the end of that 12 month period. If the duty is not paid within that time interest, at the rate of 0.0219 per cent per day (see section 159D) from the first day after the expiration of the 12 month period to the date the duty is paid, is payable. In addition, a penalty of 1% of the duty for each day the duty remains unpaid after the 14 day period of grace is payable.

(5) The repo buyer must maintain, for a period of 3 years from the date of the stock transfer, separate records of each stock transfer and any stock return(s) made in respect of that stock transfer.

Relevant Date: Finance Act 2014