Reduction in the Rate of Duty on Donations of Shares & Business Property Between Family Members

Applicable to Donations Made Before 1 April 2018.

A reduced rate of duty of 1.5% has been introduced through a legal notice issued on 2 May 2017.

The reduced rate of duty is applicable for a limited period of time to:

• donations of shares in a company from an individual to related persons, being one’s spouse, descendants and ascendants in the direct line and their relative spouses, or in the absence of descendants to one’s brothers or sisters and their descendants; and
• donations of immovable property from an individual to the related persons mentioned above, where such immovable property would have been used within a family business (as defined in the Family Business Act) for at least 3 years prior to the donation.

The applicability of such 1.5% rate may result in a significant reduction in the duty payable on donations between family members since the standard rate of duty is normally 2% or 5% in the case of shares in a company and 5% in the case of immovable property.

The reduced duty rate will only apply to donations effected through a public deed before 1 April 2018 and the applicable schedules prescribed under the Duty on Documents and Transfers Rules would need to be delivered to the Commissioner for Revenue by 31 May 2018.

Certain claw backs apply if the donee transfers the donated shares or business property within 3 years from the donation, or if the business property is not used within the family business within 3 years from the donation.