The Finance Act 2017 was signed by President Higgins on 25 December 2017. We previously reported on some of the key provisions of the Finance Bill affecting businesses here.
Between the publication of the Bill in October 2017 and the signing into law, a number of amendments were made to the original Bill, some of which could be quite significant. Here we highlight some of the main amendments.
6% stamp duty on sale of certain shares
Ordinarily a sale of shares attracts stamp duty at a rate of 1% (unless the transfer is exempt or relieved from stamp duty). A late change to the 2017 Finance Bill introduced an increase in the stamp duty rate to 6% in certain circumstances in respect of transfers of shares in companies, Irish Real Estate Funds (REIF), certain other funds, or partnership interests that derive their value from Irish non-residential property. The circumstances where the 6% rate will apply are where:
- The transfer results in a change in the person or persons having direct or indirect control over the property; and
- It would be reasonable to consider that the property concerned:
- was acquired by the company, IREF or partnership with the sole or main object of realising a gain from its disposal
- was or is being developed by the company, IREF or partnership with the sole or main object of realising a gain from its disposal when developed or
- was held as trading stock by the company, IREF or partnership
There are transitional measures, which will limit the stamp duty rate to the existing rate (1% or possibly exempt) where a binding contract was entered into before 6 December 2017 and completes before 1 March 2018. The new rate will apply to contracts for sale of such shares as well as actual transfers of shares.
Stamp duty rebate where land purchased is used for residential development
A stamp duty refund scheme in respect of land purchased to develop residential property was introduced at the Report Stage. The Act provides that where stamp duty at the new higher rate of 6% is paid on the acquisition of land which is subsequently used to develop residential property, the purchaser will be entitled to a rebate of 2/3 duty paid. The rebate is only applicable in respect of the proportion of the land used for residential development. The scheme only applies where construction begins before 1 January 2022 and the construction must commence within 30 months of the date the land was acquired. However the time taken to conclude any planning appeal can be added to this 30 month period). There is a four year time limit on claiming a repayment, the repayment will not carry interest, and it must be claimed via Revenue’s e-Stamping system. Where the residential development is being carried out in phases, repayments can be sought on a phased basis.
The Employment Incentive and Investment Scheme (EIIS) provides income tax relief of 40% to individuals who invest in certain qualifying companies. In an amendment announced to bring the scheme within the provisions of the European Commission General Block Exemption Regulations (State Aid), individuals who are connected with the investee company are now excluded from claiming the relief in respect of shares issued on or after 2 November 2017.
New capital allowances
The Act introduced a new capital allowance relief for employers in respect of the capital cost of constructing and equipping qualifying fitness or childcare facilities. Capital allowances on the qualifying construction cost of the building are granted over seven years. The capital allowances on qualifying childcare or fitness equipment used in qualifying facilities will be accelerated, allowing 100% of such costs in year 1 (instead of being granted over 8 years under the normal rules). A ministerial order is required to commence these provisions.