Joan Burton (Dublin West, Labour)
Link to this: Individually | In context

Question 151: To ask the Minister for Finance if his attention has been drawn to schemes of avoidance of stamp duty (details supplied); if the Revenue Commissioner's attention has been drawn to such schemes; the reason they have not chosen to act under Section 811 of the Taxes Consolidation Act 1997; and if he will make a statement on the matter. [11928/07]

Brian Cowen (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context

I am advised by the Revenue Commissioners that they are aware of licensing arrangements between developers and landowners. The arrangement mentioned in the question arises where the developer obtains a licence from the landowner that entitles the developer to enter onto the land and erect buildings. The usual way of achieving this is for the landowner to grant the developer or his bank or both a power of attorney, which allows them to execute a conveyance or transfer of the legal title to the ultimate purchaser without further recourse to the landowner. Because there is no conveyance of the land from the landowner to the developer stamp duty does not arise at this point. Stamp duty does, however, arise when the ultimate purchaser buys the land on which a building will usually have been erected by the developer, subject to the availability of the normal stamp duty reliefs.

Section 811 of the Taxes Consolidation Act 1997 is a general anti-avoidance measure. It is intended to defeat the effects of transactions, which have little or no commercial reality but are intended primarily to avoid or reduce a tax charge or to artificially create a tax deduction or tax refund. Individual instances of licence agreements of the kind described above would be reviewed from this perspective. To date no case has been identified for which it would be appropriate to invoke section 811 by reference to an absence of business purpose.

The Deputy will be aware that the Finance Bill 2007 contains a specific proposal to amend the provisions of the Stamp Duty Consolidation Act 1999, to bring in a charge to Stamp Duty in certain circumstances where Licence Agreements are involved. Briefly stated, the proposal, which is subject to a commencement order, is that where by virtue of a licence agreement, the landowner receives a payment amounting to 25% or more of the market value of the land in question, the agreement will be chargeable with Stamp Duty at the same rate as if there were a conveyance or transfer of the land.