Stamp Duty and leases
Difference between a lease and a license
Stamp Duty is chargeable on leases.
Stamp Duty is not chargeable on written licences except where Section 31B of the Stamp Duties Consolidation Act, 1999 applies.
Under Section 31B, Stamp Duty is chargeable on licence agreements relating to land in Ireland under which:
- the licensee is allowed to carry out development on the land
- the licensee pays the licensor 25% or more of the market value of the land
- the payment is not for the purchase of the land.
It can be difficult to distinguish between a lease and a licence. An instrument (written document) may be called a licence but may contain the characteristics of a lease. If that is the case, the instrument is chargeable as a lease.
Licence agreements most commonly cover rights to:
- park a car for a fixed period at certain times
- operate a sales stand in a shop or market
- enter land to extract, for example, gravel
- enter land to place and maintain, for example, advertising hoardings
- enter land to conduct soil surveys.
Generally, to be a lease, the instrument must:
- create a landlord and tenant relationship
- grant the tenant a leasehold estate
- provide for the tenant to have exclusive possession of the property.
The owner of land may allow another person to grow a crop on the land. The owner and the other person may enter into a written agreement (usually called a Conacre Agreement).
Stamp Duty is not chargeable provided the Conacre Agreement only allows the other person to enter the land to grow the crop. This type of agreement is not a lease as it does not provide for exclusive possession (the owner may enter the land at any time).