Ireland recently enacted a reduction to the rate of stamp duty on the acquisition of business assets subject to stamp duty. This includes goodwill, the benefit of contracts and commercial real estate. The stamp duty rate has been reduced considerably from a top rate of 6% to a lower flat rate of 2%. This new rate of 2% will now apply to transfers executed on or after December 7 2011.

While the focus of this reduction in stamp duty has mainly related to a hoped for stimulus for the Irish real estate market, the reduction will also have an important and positive impact on the structuring of Irish corporate acquisition (M&A) transactions, as asset sales in Ireland will now be significantly more attractive in stamp duty terms than previously. The stamp duty costs of an asset purchase at the new reduced rate of 2% of the consideration for chargeable assets (for example, goodwill) can now compare more favourably to the 1% stamp duty on a share purchase. This is particularly the case as not all business assets purchased as part of an asset purchase may be chargeable assets (subject to the 2% charge) but the entire purchase price for a share purchase will be subject to the 1% charge. The stamp duty reduction is therefore a positive measure which gives more commercial flexibility in structuring the acquisition of Irish businesses.

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