Donohoe to consider budget cut for stamp duty on share trading
Tax of 1 per cent on share trading in Irish firms raised €369.7 million for State in 2016
The Minister for Finance Paschal Donohoe is pondering a reduction in the stamp duty charged on share trading in Budget 2019. Photograph: Tom Honan
Minister for Finance Paschal Donohoe is set to consider whether to slash a 1 per cent stamp duty on share trading in Irish companies in October’s budget. The tax currently generates almost €400 million a year for the exchequer.
Officials in the Department of Finance are preparing a report that is expected to be presented to the Minister “by the end of the summer for consideration in advance of the budget,” according to a spokesman for the department.
Mr Donohoe launched a public consultation last September on the future of Ireland’s stamp duty on share trades, which is double the rate levied in the UK and more than three times that in France.
He sought feedback on whether duty on transactions “continues to be justified as part of our overall taxation system”, and if the charge would have an impact on the country’s competitive position after the UK exits the European Union.
The Minister also requested that respondents outline how tax raised from the levy, which Euronext Dublin (formerly the Irish Stock Exchange) estimates raised €369.7 million for the Government in 2016, could be replaced by alternative revenue streams from the financial services area.
The Government’s Summer Economic Statement, published last week, estimated that the Minister would have flexibility for a net €800 million of spending increases and tax deductions in Budget 2019.
Euronext Dublin has long lobbied for the 1 per cent Irish rate – which applies to trading in Irish companies whether in Dublin or abroad – to at least be reduced to the UK level. The Government abolished stamp duty early last year on companies listed on the junior stock market in Dublin.
In a submission to the department before the deadline last November, seen by The Irish Times, the bourse, which is owned by pan-European exchange operator Euronext, said the duty “cannot be justified in today’s climate”.
It proposed that the rate by cut “immediately” to 0.5 per cent in line with the UK’s decison to phase the charge out entirely over time.
“In a global economy where investment is mobile and Irish companies are competing with enterprises for investors, stamp duty places Irish companies at a significant disadvantage to their competitors when trying to attract much-needed capital,” the Irish exchange said in the document.
“Post Brexit, Ireland’s stamp duty regime makes other EU jurisdictions more attractive than Ireland for businesses relocating from the UK.”