Brian Cowen (Laois-Offaly, Fianna Fail)

This year, Revenue is conducting a broad review of the construction industry. When it reports before the Finance Bill, we will see what it has to say about the situation.

Under the stamp duty code, a developer can obtain a licence from a landowner to build on that land without incurring a stamp duty charge at that stage of the venture. There is no duty on the licence, as the licence only confers on the developer a right to build on the land. Once the buildings, whether commercial or residential, are completed, the conveyances or transfers of such properties to purchasers are chargeable to stamp duty in the normal manner unless specific exemptions are available.

Due to the nature of stamp duty being primarily a tax on legal instruments under which the interest in the property passes, no stamp duty is payable on the legal instrument until the title passes. However, if the property is paid for by a developer in the normal way instead of via taking a licence to build on it, the situation would be reflected in the purchase price because there would be an up front cost to the developer.

In the other situation, which has been a feature for some time, developers get licences to build on land and sell the building to purchasers. In effect, the purchaser buys from the developer and the original landowner. I have asked the Revenue Commissioners to report to me to allow the full consideration of any issue that arises in respect of this matter prior to the Finance Bill 2007.

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