Revenue Note for Guidance

The content shown on this page is a Note for Guidance produced by the Irish Revenue Commissioners. To view the section of legislation to which the Note for Guidance applies, click the link below:

Revenue Note for Guidance

Section 54 Leases deemed to operate as voluntary dispositions inter vivos

Summary

This section is designed to permit stamp duty to be assessed on the value of any benefit passing to the lessee where the lease confers a substantial benefit on the lessee. Section 8(5) imposes an obligation to tell the Revenue Commissioners when a lease is operating as a voluntary disposition inter vivos. Surcharges apply if the property being leased is undervalued (see section 15).

Details

(1) Any lease not being executed in good faith and for valuable consideration is deemed to be a lease operating as a voluntary disposition inter vivos. The consideration for any lease is not for this purpose deemed to be valuable consideration where the Revenue Commissioners are of the opinion that, by reason of inadequacy of consideration or other circumstances, the lease confers a substantial benefit on the lessee.

(2) Where a lease operates as a voluntary disposition inter vivos, a capital payment, of an amount equal to the amount of the benefit passing, will be imputed to the lease and that capital payment will be subject to stamp duty in the same way as if it were a premium payable under the terms of the lease.

Example

A leases a premises to B for 3 years at an annual rent of €15,000. No premium is payable. If let on the open market on such terms (i.e. 3 years, no premium) a rent of €30,000 p.a. would be obtainable. If the rent were to remain unchanged a premium of €40,000 (i.e. €15,000 p.a. for 3 years, discounted) should have been reserved in the lease in order to ensure that A was letting the premises at full market value. The chargeable consideration for stamp duty is:

Rent:

€15,000

and

Premium:

€40,000.

Relevant Date: Finance Act 2014