Paschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

Prior to the Finance Act 2017, agricultural land that was leased for solar panels was not classified as qualifying agricultural property for the purposes of capital gains tax retirement relief or agricultural relief from capital acquisitions tax.

Following a review of the tax treatment of the installation of solar panels on farmland in 2017, a change to this approach was announced in budget 2018.

Under this revised approach, it is possible for land leased for the installation of solar panels to be classified as qualifying agricultural property under certain conditions. A key condition is that the total area of land under lease and on which solar panels are installed does not exceed 50% of the total area of agricultural land.

Revenue requires that the total area within the perimeter of the land that has been leased by the developer and on which solar panels have been installed is counted for the purposes of calculating the proportion of land given over to this alternate use. In other words, the entire area that has been leased is counted. This includes the marginal areas of land that lie between and around the rows of solar panels that have been installed.

The view of Revenue is that it would not generally be possible to farm any land on which equipment for the production of renewable energy is installed. Due to the large scale and high density nature of solar operations, large areas of agricultural land are removed from normal productive agricultural activity. To maintain the policy objective of agricultural relief, a 50% limit on the amount of land that can be diverted to this alternative use is in place.

From the point of view of the Revenue Commissioners, we believe clarity is in place to allow a determination of what land has been used for and the effect, therefore, it has on claiming tax relief. If the Deputy has particular matters in which this clarity is not apparent for individual cases and shares them with me I will, in turn, share them with the Revenue Commissioners and ask that they respond to him. From a policy point of view, the Revenue and I are satisfied that there is clarity regarding land use. I reiterate that if the Deputy is aware of individual matters that the Revenue should consider – I am sure they have already considered them - if he shares with me I will, in turn, share them with the Revenue Commissioners.