Revenue Note for Guidance

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Revenue Note for Guidance

117 Statement to be charged with stamp duty

Summary

This section sets out the charge to companies capital duty and the manner in which particulars are to be supplied to enable the amount of duty to be determined.

Details

(1) When a chargeable transaction (see section 116) takes place prior to 7 December 2005, a statement of the assets, liabilities and expenses referred to in section 118 is to be delivered to the Registrar of Companies.

When a statement is required to be delivered the forms7 to be used are—

  • A1, when a capital company is being formed,
  • B5, when shares are being allotted in a capital company or assets are being contributed as a result of a share conversion or assets are being contributed in return for rights (e.g. voting rights) or when a loan is being capitalised (i.e. when shares are issued in repayment of a loan),
  • 25B, when a company which is not a capital company is being converted into a capital company e.g. when a company is being converted from unlimited to limited status,
  • LP1 and LP3, when a limited partnership is being formed,
  • LP2 and LP4, when there is an increase in the capital contribution of a limited partnership.

Forms A1 (together with the Memorandum and Articles of Association), LP1 and LP3 and LP2 and LP4 are submitted direct to the Companies Registration Office (CRO), together with any companies capital duty payable - the CRO, subsequently, remit the companies capital duty payment to the Revenue Commissioners. Forms B5 and 25B are submitted direct to the Revenue Commissioners together with any companies capital duty payable and, in the case of the form B5, the CRO filing fee of €128 - the Revenue Commissioners subsequently forward pages 1 and 2 of the form B5 together with the fee to the CRO. The original form 25B is returned after stamping to the company for forwarding by the company to the CRO.

Additional requirements have to be satisfied when the consideration for shares being allotted is not cash viz.

  • the contract for sale or, where the contract has not been reduced to writing, form 52 (a CRO form), must be lodged with the Revenue Commissioners9, and
  • if the non-cash consideration comprises—
    • shares in an unquoted company,
      • the adjudication reference number in a case where a completed form SD 4 was submitted (section 20), or
      • a completed form CCD 4 together with a copy of the company’s latest audited accounts,
      must be submitted in addition to form B5 or form 25B,
    • land and buildings, a valuation of the property must be submitted in addition to form B5 or form 25B.

Where relief from companies capital duty is sought on the basis that the shares being issued are in replacement for shares previously redeemed (see commentary on section 116) a copy of form 28 must be submitted to the Revenue Commissioners in addition to the form B5. Form 28 is a CRO form on which details of the redemption are filed.

Where the chargeable transaction is the formation of a capital company the statement must be delivered before—

  • (1)(a) incorporation, in the case of a capital company to be incorporated under the Companies Act, 1963, and
  • (1)(b) registration, in the case of a capital company to be formed under the Limited Partnerships Act, 1907.

In every other case the statement must be delivered to the Registrar within 30 days after the date of the chargeable transaction.

(1) The statement is chargeable with duty at the rate of 0.5% for transactions effected prior to 7 December 2005, (1% for transactions effected prior to 2 December 2004) subject to a minimum charge of €1.

The amount chargeable is determined in accordance with section 118.

(2)(b) When substantial assets are being transferred on the formation of a capital company it may take some time to arrive at a valuation of those assets. In such circumstances a provisional assessment may be made by the Revenue Commissioners. This enables the statement to be stamped and incorporation or registration of the capital company to proceed. Provision is made for a refund of any excess duty paid - but see also section 159A as regards the time limit for making a refund claim and section 159B as regards interest that may be payable on such refunds.

(4) If too little is paid then the additional duty due is payable and treated as duty in arrear. The rate of interest chargeable on any additional duty which arises in connection with the formation of a capital company by virtue of the fact that the initial assessment (subsection (2)(b)(i)) was only a provisional one is 0.0219 per cent per day (see section 159D).

(3) In the case of a chargeable transaction other than the formation of a capital company interest is payable at the rate of 0.0219 per cent for each day (see section 159D) for which the duty remains unpaid after the expiration of the period of one month from the date of the chargeable transaction.

The interest is chargeable and recoverable in the same manner as if it were part of the duty. Section 1089 of the Taxes Consolidation Act, 1997, provides that interest payable under this subsection is payable without deduction of income tax and not allowable in computing any income, profits or losses for any of the purposes of the Income Tax Acts and the Corporation Tax Acts.

(5) The Registrar of Companies may not incorporate or register a capital company until the statement is duly stamped or in the case of a capital company to which section 120 applies the statement has been adjudicated (see section 20).

7 Forms A1, LP1, LP2, LP3 and LP4 are all Company Registration Office (CRO) forms. Form B5 is a joint CRO/Revenue form. Form 25B is a Revenue form.

8 This fee does not apply to companies registered on the External Register in the CRO.

9 Section 58 of the Companies Act, 1963, provides that in the case of shares allotted as fully or partly paid up shares in a limited company otherwise than in cash, a return of the allotments (form B5) together with a duly stamped contract of sale or for services or other consideration in respect of which that allotment was made or, if that contract has not been reduced to writing, particulars of the contract (form 52) must be delivered to the registrar. Under section 58(2) form 52 is deemed to be an instrument for stamp duty purposes and is stampable as if it were a contract. Most contracts for sale or forms 52 do not attract stamp duty under section 31 because the assets comprising the consideration (e.g. non-bearer shares, land and buildings) are specifically excluded from the charge to duty under that section. However, contracts or forms 52 relating to other assets such as book debts, goodwill, etc., are chargeable to duty under that section.

Relevant Date: Finance Act 2014