Paschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

A sale of shares is normally chargeable to stamp duty at a rate of 1%, as Deputy Doherty concluded, and is payable by the purchaser. I am advised by Revenue that where a company purchases its own shares, the stamp duty treatment depends on the form in which the shares are held and the method by which the purchases are effected.

For shares held in paper form, the shares may be bought back in two ways. The first is by means of a standard stock transfer form. The second is where the shareholder and the company enter into a contract or share purchase agreement for the sale of the shares, following which the shareholder hands over the share certificates to the company.

Where a company purchases its own shares by means of a stock transfer form, a stamp duty charge arises. Where a company enters into a contract or share purchase agreement, Revenue accepts that there is no stamp duty chargeable on the transaction by virtue of section 31(1)(b) of the Stamp Duties Consolidation Act 1999. This section provides for stamp duty to be charged in respect of any contract or agreement for the sale of any estate or interest in any property as if it were an actual conveyance on sale of the estate, interest or property.

However, it specifically excludes from its scope the sale of certain property, including shares. Accordingly, where a company purchases its own shares by means of a contract or agreement, no charge to stamp duty arises.

For shares held in uncertificated, or dematerialised, form, the shares may be bought back via a securities settlement system. Euroclear operates the securities settlement system for trading in Irish shares. Where a company purchases its own shares via a securities settlement system, it has been a long-standing Revenue practice to confirm that stamp duty is not chargeable.

In advance of budget 2023, officials in my Department carried out a preliminary examination of issues relating to the stamp duty treatment of share buybacks, as was flagged in the tax strategy group papers. On the conclusion of that preliminary examination, departmental officials recommended to me that no changes should be introduced in the Finance Bill 2022 and that the Department should carry out a more in-depth analysis of this issue in the year ahead. In this context, I can confirm for the Deputy that the matter of the stamp duty treatment of share buybacks will be considered in greater detail in 2023.

On reporting of information in relation to share buyback, companies are required to report to the Central Bank on share buyback activities under Article 5 of the market abuse regulation. However, the Central Bank looks at these reports on a case-by-case basis and does not keep a database from which this information can be extracted.