Issued on 2nd May 2017, the Duty on Donations of Marketable Securities and Immovable Property Used for Business (Exemption) Order, 2017 (L.N. 131 OF 2017) had introduced a reduced rate of duty for intra-family donations of company shares and immovable property used within a family business.
The main features of this legal notice are outlined below:
- The 2% or 5% standard rate of duty which is generally applicable to the transfer of company shares has been reduced to 1.5% for intra-family donations. Thus, the new rate will apply for donations made to spouses, descendants and ascendants in the direct line and their relative spouses, or in the absence of descendants, brothers and sisters and their descendants.
- The reduced duty rate of 1.5% will also be applicable on the donation of immovable property which has been used as a “business property” (as defined in the Family Business Act) for a period of at least 3 year prior to the donation. The donor must provide the notary with a report prepared by an auditor assuring that the business property was being utilised by the business for that 3-year period.
- The reduced duty rate of 1.5% will only apply to donations that are made from 1st April 2017 up until 1st April 2018 and where the appropriate schedules required by the Duty on Documents and Transfers Rules are delivered to the Commissioner for Revenue (who may request additional information) by 31st May 2018. The only way that one will be able to receive a reduced rate is if a donation is made by public deed.
- Reduced duty rate will be forfeited if the person who receives the shares or property transfers such shares or property within 3 years of the donation. Forfeiture will also occur if the business property is not used as such within 3 years of the donation.