UK duty breaches EU directive

Stamp duty reserve tax on transfer of shares into a clearance service

In 2006 Air Berlin a commercial airline incorporated in the UK undertook an initial public offering on the Frankfurt Stock Exchange. Under German law it had to list all shares of the same class including those that were not going to be sold. Therefore Air Berlin transferred the legal title to its share capital to Clearstream Banking as nominee of the Frankfurt Stock Exchange’s settlement and clearing service. This triggered a 1.5% stamp duty reserve tax charge under FA 1986 s 70. Further charges arose in 2009 when Air Berlin issued shares that were also transferred to Clearstream. In March 2010 Air Berlin claimed a repayment of the stamp duty. HMRC refused.

On the 2006 transaction the Court of Justice of the EU said the transfer had not resulted...