Minister Noonan makes it easier to invest in Ireland’s growing businesses by extending an exemption on Stamp Duty
The Minister for Finance, Michael Noonan T.D., today has signed an order to provide an exemption from Stamp Duty on transfers of shares in Irish companies admitted to the Enterprise Securities Market (ESM) of the Irish Stock Exchange. The measure will come into effect on 5th June 2017.
Speaking earlier today the Minister for Finance, Michael Noonan T.D. said:
“The purpose of the measure is to encourage more investors to back Irish Small and Medium Enterprises, increasing the supply of equity available to SMEs for growth and job creation. It is also our intention that the measure will encourage entrepreneurs and growing businesses to use public equity to raise finances. The cost of the exemptions is estimated at €5m in a full year.”
“The Enterprise Securities Market (ESM) is the Irish Stock Exchange's (ISE) market for growth companies. It is designed for small and mid-sized companies, particularly those in the early stages of their development who have specific funding needs. I hope the measure I am introducing will assist SMEs in accessing funding to grow their businesses.”
“I’d like to thank the Irish Stock Exchange for the help they have provided in this matter and I am confident that a productive relationship between the ISE and the Department of Finance will have a positive effect on the fortunes of Ireland’s businesses and the prospects for job creation in Ireland.”
Wednesday 17 May 2017
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Notes for Editors
What is the aim of this measure?
The signing of this order commences section 70 of the Finance (No.2) Act 2013.
Non-bank finance has become an increasingly important source of capital for those businesses that wish to grow and create employment.
The Enterprise Securities Market (ESM) is the Irish Stock Exchange’s (ISE) market for growth companies. It is hoped the exemption from Stamp Duty will encourage more investors to back these companies increasing the supply of equity available to SME’s for growth and job creation.
This Stamp Duty measure could encourage entrepreneurs and growth companies to use public equity markets as a source of financing.
The exemption removes any competitive disadvantage that Irish growth companies may face compared to companies located in other EU jurisdictions where a stamp duty regime is not in place. The measure also brings them on a par with UK companies following the abolition of stamp duty for UK companies listed on Alternative Investment Market (UK equivalent to the ESM).
What is the estimated cost of the proposed exemption for ESM companies?
The cost is estimated at €5m in a full year.
What is the charge to Stamp Duty on the transfer of shares?
Transfers of shares in Irish companies incur a 1% stamp duty charge
What is the annual yield from Stamp Duty on share transfers?
The annual yield from Stamp Duty on share transfers since 2009 is as follows:
2009 €208 m
2010 €182 m
2011 €195 m
2012 €172 m
2013 €252 m
2014 €282 m
2015 €424 m
2016 €392 m
How will this exemption benefit the Company if it is the purchaser that is liable for the Stamp Duty?
When a company’s shares are transferred, Stamp Duty is a cost to the purchaser of the shares and not the Company. However, the exemption and therefore the cost saving, may increase the attractiveness of the shares to potential purchasers thereby increasing the funding available to a company.