IRELAND Law and Practice Contributed by: Diarmuid Mawe, Craig Kenny, Katelin Toomey and William Fogarty, Maples Group
In relation to new buildings, VAT must be charged at the rate of 13.5%. A property is considered “new” where it has been developed in the previous 20 years, or where buildings on it have been developed or redeveloped in the previous five years. The first sale of residential property by the person who developed the property is always subject to VAT. Sales of old property are exempt from VAT. In a VAT-exempt sale of property, to avoid a claw - back of VAT that the seller may have previously recovered, the seller and buyer may agree to make an exempt sale VAT-able and jointly opt to tax the sale of the property. Exemptions Transfer of business applies to the sale of a prop - erty that has been let in the past, on the basis that the buyer intends to carry on the same sort of business as the seller (ie, letting the property), and will only apply if the sale is to a person who is accountable for VAT purposes (ie, a person who is obliged to register and account for VAT). Where the transfer of business relief applies to the sale of an “old” property, no VAT adjustment (known as a Capital Goods Scheme Adjustment) should arise for the seller, and the buyer will take over the property’s obligations from the seller under the capital goods scheme. Where the transfer of business relief applies to the sale of “new” property, the seller may be able to claim further VAT input credit where it was not entitled to recover the VAT incurred on the acqui - sition or development of the property. 8.2 Mitigation of Tax Liability As mentioned in 2.10 Taxes Applicable to a Transaction , where non-residential property is
transferred and subsequently utilised for the construction of residential accommodation, a stamp duty refund is available, which effectively reduces the rate from 7.5% to 2%. Stamp duty on the transfer of Irish shares is generally charged at 1% of their value. Previ - ously, stamp duty was mitigated on large-scale acquisitions through selling the corporate vehi - cle holding the property; however, transfers of corporate entities and partnerships can be subject to 7.5% duty where the entity derives over 50% of its value from Irish land intended for development, held as trading stock or held with the sole or main object of realising a gain on disposal. This provision is subject to a number of conditions, including that the transfer involves the transfer of control of the land. There are stamp duty exemptions for intra-group Commercial rates are imposed by local authori - ties against businesses premises; the local authority determines the level of rates. A partial abatement from the payment of com - mercial rates may be possible where a property is vacant, although this depends on the local authority in question, and the level of any abate - ment varies between the different authorities. 8.4 Income Tax Withholding for Foreign Investors Tenants of non-resident owners of Irish property are obliged to withhold tax from rental income prior to remitting overseas, at the standard income tax rate of 20%. This can be avoided if the landlord has employed an Irish agent to collect the rents. transfers of real estate. 8.3 Municipal Taxes
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