Contributed By Walkers
No Irish taxes are charged on the issuance of listed or unlisted debt securities or on the establishment of a debt issuance programme.
The transfer of a contract debt owed by an Irish resident company falls within the charge to Irish stamp duty, as such debt is regarded as property situated in Ireland for the purposes of Irish stamp duty. Debt structured as loans are generally novated, where possible, rather than assigned. No charge to stamp duty arises on novations as they do not constitute a conveyance or transfer and so do not fall within the charge to Irish stamp duty.
However, if a loan cannot be novated, it should be possible in the vast majority of cases to avail of one of a number of exemptions.
An exemption from stamp duty applies in respect of transfers of "loan capital" of a company or other body corporate. "Loan capital" is defined as "any debenture stock, bonds or funded debt, by whatever name known, or any capital raised which is borrowed or has the character of borrowed money, whether in the form of stock or in any other form". A debt qualifies as loan capital if all of the following apply:
A separate exemption from stamp duty is available where debt is transferred in the ordinary course of business of the vendor or the purchaser, provided the instrument of transfer does not relate to Irish land or buildings, or stocks or marketable securities of an Irish registered company (other than an Irish securitisation vehicle or an Irish investment undertaking, ie, an Irish regulated fund such as an ICAV).
The issue or transfer of debt securities issued by Irish securitisation vehicles (ie, qualifying companies within the meaning of Section 110 of the TCA) are specifically exempted from the charge to Irish stamp duty provided the money raised by such debt securities is used in the course of the company's business.
Transfers of American depositary receipts ("ADRs") are exempt from stamp duty provided that the ADRs are traded on a recognised stock exchange in the US or Canada or they represent stocks or marketable securities so traded.
If no exemption is available, the transfer of a debt security owed by an Irish resident company may give rise to a charge to stamp duty. If the security falls within the definition of stock or marketable securities and is not otherwise exempt, the transfer is charged to stamp duty at 1% of the consideration paid or the market value of the debt transferred (whichever is higher). In all other cases the rate applicable is 6%. The duty is generally levied on the transferee.