Michael McGrath (Cork South Central, Fianna Fail)
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227. To ask the Minister for Finance his views on the taxation treatment of contracts for difference; his plans to review the matter; and if he will make a statement on the matter. [33484/14]

Michael Noonan (Limerick City, Fine Gael)
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I am informed by the Revenue Commissioners that a contract for difference (CFD) is a form of derivative instrument that enables an investor to take a position on a share in a company and its likely performance (either a rise or fall in share value) without owning the shares.The contract is between two parties, usually described as "buyer" and "seller", stipulating that the seller will pay to the buyer the difference between the current value of the shareand its value at contract time. If the difference is negative, then the buyer pays to the seller.

Where a CFD is held in the course of a financial trade, the accounting profit or loss on the transaction is taken into account in calculating the profit or loss of the trade for tax purposes.

Where a CFD is held otherwise than in the course of a financial trade, then it is a capital asset for CGT purposes. There are no special rules applying to CFDsthey are subject to the same rules as any other chargeable asset. Accordingly, any gain realised on a CFD is taxable with a deduction for broker fees incurred in entering into the transaction.

CFDs are exempt from VAT.

A CFD does not attract a stamp duty liability.In general, stamp duty arises on the purchase of shares. Where shares are acquired by a person in the course of carrying on a financial trade as intermediary, the intermediary is not subject to stamp duty.  This position was reconfirmed when the law as it relates to stamp duty on share transactions underpinning CFDs was reviewed in 2007 with a view to ensuring that the market in Irish equities would continue to be a liquid market conducive to capital acquisition by Irish firms.

If any issues, which it is considered would justify the current taxation treatment of CFDs being reviewed, are brought to my attention they will be examined in consultation with the Revenue Commissioners.