1% Stamp Duty charge

Purchase this morning of Smurfit Kappa Group Plc and the contract note has 1% stamp duty charge.

I’ve asked Freetrade support why it’s 1% and not 0.5%
They’ve come back with “We can’t help with queries regarding tax.” and they’ve pointed me towards Capital Gains tax documentation and Dividend Tax.

I’m rapidly loosing confidence in the backend systems here and the support just appears to be completely inadequate.

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It’s an Irish company. Stamp duty is 1% in Ireland, so I assume this is levied even when buying in £.

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Irish company - 1% stamp duty in Ireland - source

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Slightly odd that it’s listed in GBP and traded through the London Stock exchange but tax due in Ireland?

It’s like buying a pint of Guiness in London and paying the beer duty for Dublin!

As per usual though, Freetrade doesn’t list it with Irish Stamp duty or flag it, and when asked they can’t even be bothered to read the ticket properly.

But thanks for the response, sure beats Freetrades own support!

In the app, it does list it as 1% stamp duty, under the costs and charges. Did you not look?

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Only spotted it in the review order section, but still doesn’t explain why a charge levied in Ireland would apply to a share traded in GBP on the LSE.

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That’s just how it is. I think similar rules apply in France and Italy too, and anyone has to pay the stamp duty on share transactions for companies domiciled there, regardless of where the transaction happens.

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Another example: Guernsey based companies with zero stamp duty e.g. TRIG

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Monevator has a blog post out today which seems relevant, if rather technical. It focuses on ETFs but I think it seems relevant to all Irish stocks. If I understand correctly after a quick skim, it appears that pre-Brexit, Ireland and the UK used the same service (CREST) for electronic share ownership records, but a consequence of Brexit is that Ireland is no longer included, so now when you buy Irish stocks, you get a stand-in called a CDI instead of the actual stock. Monevator says that CDIs are ‘not subject to UK stamp duty. However you may pay any equivalent levy imposed by the underlying share’s home market.’

Edited to add link to the blog post!

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That would make some sense, as there’s a transaction taking place in Ireland to purchase the underlying stock, while in the UK you’re bying little more than contract with value that matches the underlying stock.

However, I’m still stuck with the fact that it’s listed on the LSE, and therefore the trade should in theory take place entirely within the UK.

Another view would be that BP is listed in both the UK and US. US buyers don’t pay UK stamp duty on BP shares bought via the US exchange. (To the best of my knowledge)

And thanks for bringing up the issue of CDI’s (I’m still smarting over XO ripping me off £30 for CDI charges on a US purchase last month)

In you bp example, that may be as a result of the US version being ADR/ADS instruments?

This is because Ireland imposes stamp duty on transfers of Irish property(e.g. shares in an Irish company) even when transacted outside Ireland

Not all countries do this.

“You pay Stamp Duty on certain instruments (written documents) that:

transfer ownership of property
or
are agreements to transfer ownership of property.

Property includes land, buildings, business assets (like goodwill) and shares, stocks and marketable securities (both quoted and unquoted) .

You also pay Stamp Duty on certain leases and agreements to lease.

When is an instrument liable to Stamp Duty?

An instrument is liable to Stamp Duty if you execute (sign, seal or both) it:

in Ireland
or
outside Ireland, but it relates to property in Ireland or something done or to be done in Ireland.

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Completely off topic, I wonder if that caught Google when they transferred their IP into/out of Ireland :grinning:

“Rapidly losing confidence” - but this was your error?

You can’t expect them to explain everything to you… judging by other replies here a simple search would have done the job.

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