Developers’ exposure to Stamp Duty to increase
Government chooses not to take recommendations from independent report

Despite concerns surrounding the effects of changes to Stamp Duty rules on the already depressed property market, today’s Finance Bill proposes to introduce a measure which will further increase property developers’ exposure to Stamp Duty. The measure, which would appear not to be retrospective will lead to Stamp Duty being payable in full on certain land contracts and licences, is subject to a commencement order and is similar to that proposed in 2007 - but with a carve out for Public Private Partnerships and certain tax based structures. It creates a level of uncertainty for developers at a time when invigorating the market should be the priority.

Joanne Whelan, Tax Partner, Deloitte explains: “A typical structure used by developers in accessing land banks would be to acquire the land by way of contract or licence. They would then develop the land and sell it on to the ultimate purchaser. This structure would ensure that no Stamp Duty was payable by the developer."

“Previously, the Government looked at introducing provisions to counteract such structures and thereby trigger the payment of Stamp Duty by the developers in Finance Act 2007. There was much debate and concern within the property industry about the impact of introducing such legislation. So much so the then Finance Minister, Brian Cowen, commissioned an independent report to examine the matter. The strong recommendation from that was not to introduce the legislation as to do so “would run the risk of exacerbating the downturn in the property market."

“One wonders therefore why the current Minister thinks it necessary to re-open this debate at a time when the property market is virtually stagnant and the construction industry is finding it hard to keep its head above water. The Minister needs to clarify his thinking on this as the introduction of this measure, as it currently stands, would be counter productive to say the very least,” concluded Whelan.

Ends

For Further Information Please Contact
John McGuinness
Murray Consultants
01 498 0361
jmcguinness@murrayconsult.ie

Claire Quinn
PR Executive
Deloitte
01 417 2356
cquinn@deloitte.ie

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