Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

I will speak to the section first.

When a sale of shares in an Irish company takes place anywhere in the world, a charge of stamp duty will arise at the rate of 1% of the consideration paid. However, section 90 of the Stamp Duties Consolidation Act 1999 provides for an exemption from stamp duty on the transfer of an American depository receipt, ADR. An ADR is an instrument issued by a North American bank or broker which represents one or more shares in a foreign company, such as an Irish company. ADRs can be listed on recognised stock exchanges in North America.

Those that are can be traded, settled and held as if they were regular shares.

The section 90 exemption for ADRs was introduced in 1992 with the aim of assisting Irish companies in raising capital in the US. With the advent of Irish companies moving their primary listings to North American stock exchanges, it is now often the company shares that are traded on North American stock exchanges rather than ADRs representing such shares. Revenue has in the past confirmed that the exemption applying to transfers of ADRs can be applied to trading in Irish shares listed on recognised North American stock exchanges, subject to certain conditions being met. This is in order to be consistent with the policy intention of ensuring access to US capital markets for Irish companies.

To provide certainty to Irish companies about the stamp duty treatment of these transactions, this amendment will put this long-standing practice on a statutory footing. The amendment will operate by excluding such transactions from the scope of chapter 2 of Part 6 of the legislation. These provisions currently provide for such transactions to be chargeable to stamp duty. For the exclusion to apply, the shares must be listed on a recognised stock exchange located in North America and the trade must be settled through a securities settlement system located in North America.

On the broader issue the Deputy has raised concerning Euronext Dublin, I have engaged with Euronext on those issues. It has brought forward a report that set out some options, as the Deputy will be aware. The report was prepared by Grant Thornton. Euronext would acknowledge that a number of those recommendations require further development. We are committed to working with it and other stakeholders to seek to improve access to capital markets and equities markets in Ireland. The Deputy will also be aware the capital markets union is a very active item on the agenda of the Eurogroup and ECOFIN and all member states are working towards implementing a capital markets union action plan at this time. There were some requests in the Grant Thornton report that could not have been achieved in the short term. I refer, for example, to the proposal to abolish the stamp duty on share transfers involved very considerable cost. It was not affordable to do that and much more though is required on the issues involved. We are committed to working with Euronext in the period ahead. We recognise it is a challenge.

On a broader level, we know the scale and depth of the capital markets in Europe generally does not compare well with the United States. That is a trend that is going to require a sustained, collective effort, not just by us but also by other EU member states. That will involve significant reforms as part of the capital markets union, but there are measures we can examine. I am committed to examining those measures in more detail. That will be done in the post-budget period across the first half of next year.