From the 5th of June 2017 stamp duty will no longer be payable on the transfer of shares in Irish companies admitted to the Enterprise Securities Market (ESM) of the Irish Stock Exchange (ISE). The new measure was introduced on the 17th of May 2017 by Minister for Finance, Michael Noonan T.D. in an effort to encourage investors to back Small and Medium Enterprises (SME) in Ireland. The signing of this order commences section 70 of the Finance (No.2) Act 2013.
ESM is a market designed for small and medium companies which are in the early stages of growth, and who have specific funding needs. ESM is regulated by the ISE. The exemption from stamp duty is to ensure Irish companies in the early stages of development are on a level playing field with similar international companies when competing for domestic and international investment. Without the cost of stamp duty to the purchaser it will increase the attractiveness of the shares to potential purchasers, and potentially increase direct investment into the company. Currently the transfer of shares in Irish companies attract a 1% stamp duty charge, this rate is higher than Ireland’s EU counterparts, many of which have no stamp duty payable.
It is estimated by the Department of Finance that this new exemption will cost the exchequer €5 million in the first year. However, the stamp duty exemption for ESM companies is expected to benefit the Irish economy to a value far greater than the expected loss.
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Contributed by: Brian Duffy