On budget day it was announced that the rate of stamp duty for transfers of non-residential properties was to be increased from 2% to 6%. Transitional measures were announced in the Finance Bill that followed to allow purchasers claim the 2% rate where a binding contract had been entered into prior to 11 October 2017 subject to it completing before 1 January 2018.
Whilst the increase to 6% was effective immediately from 11 October, the transitional measures do not become law until the Finance Bill is enacted. As a result, the position initially adopted by Revenue was that all non-residential transfers must be stamped at the higher rate of 6% with purchasers then having to claim a refund from Revenue for the additional 4% they had paid. The alternative would be to delay completion until the Finance Bill is enacted in order to stamp at 2%, with the added threat of a completion notice looming overhead.
Understandably, this has caused disruption for purchasers and their funders as the cash flow implications of stamping at 6% are significant – on a transaction of €1,000,000 an extra €40,000 would need to be found and this is clearly unfair on parties who had entered into contracts in reliance on the 2% rate before 11 October.
Thankfully, after effective lobbying Revenue has now confirmed that it will facilitate the making of stamp duty returns for qualifying transfers at 2%. Revenue will give a receipt for the duty paid, however, a Stamp Certificate will not be issued until the Finance Bill is enacted.
The following certificate is to be included in qualifying deeds:
“IT IS HEREBY CERTIFIED that this instrument was executed solely in pursuance of a binding contract entered into before 11 October, 2017”
Registration in the PRA
Typically the Land Registry would reject applications which do not have the appropriate stamp duty certificate attached to the deed. Accordingly, we opened up discussions with the PRA to ensure that applications could be lodged immediately and not rejected for want of a stamp certificate where 2% had been paid on a qualifying deed.
The attached Land Registry legal notice confirms that:
The confirmations from Revenue and the PRA are welcome and should now mean that, subject to Revenue issuing Stamp certificates before 31 January 2018, qualifying transactions can complete with stamp duty being paid at the lower rate of 2% without risk to purchasers and their funders.
A link to Revenue eBrief No. 94/2017 can be accessed here.
Please click here to access the PRA legal Office Notice 2 of 2017.
This article does not constitute legal advice and if you require formal legal advice in relation to the subject matter, please contact McDowell Purcell.
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