Written answers

Tuesday, 26 June 2007

10:00 pm

Photo of Liz McManusLiz McManus (Wicklow, Labour)
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Question 107: To ask the Tánaiste and Minister for Finance if he proposes to have the Revenue Commissioners carry out a detailed examination of the number of properties availing of licensing and similar arrangements for the purposes of avoiding stamp duty; if the Revenue Commissioners have carried out an estimate of the amount of stamp duty avoided each year from the year 2002 to date in 2007 using such avoidance mechanisms; and if he will make a statement on the matter. [17165/07]

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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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.

I am advised by the Revenue Commissioners that they do not, in the normal course, receive information on the number or value of transactions by developers that involved licence agreements or other such arrangements. Developers are not required to bring such arrangements to the notice of the Revenue Commissioners. However, I am also advised by the Revenue Commissioners that, in the course of a recent review, based on a survey of developers, of these arrangements, 60 instances of this type of transaction were identified in responses relating to the two-year period ending on 31 December 2005.

The Finance Act 2007, in Section 110, made provision for a charge to stamp duty where license agreements and other such arrangements are used. License agreements and the other arrangements will come within the terms of the section where the landowner receives a payment amounting to 25% or more of the market value or consideration concerned.

Section 110 is subject to a commencement order and I have to consider the state of the property market before the provision comes into effect to ensure that it does not have an unforeseen negative effect on the market. For this reason I have decided to commission an independent study of the potential effects that such a provision may have on the market. A "Terms of Reference" for the study is currently being finalised in my Department and a request inviting tenders will issue shortly.

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