Pat Carey (Dublin North West, Fianna Fail)

This section amends section 89 of the Capital Acquisitions Tax Consolidation Act 2003. The section grants relief at 90% in respect of the market value of agricultural property situated in the State where such property is comprised in a gift or an inheritance taken by a farmer. For the purposes of this section, agricultural property includes agricultural land situated in the State. To qualify as a farmer for the purpose of section 89 of the Act, at least 80% of an individual's assets, after taking the gift or inheritance into account, must consist of agricultural property situated in the State.

The European Court of Justice, in a decision delivered in January of this year, held that a provision in tax law that confines relief to land in one member state is a restriction on the free movement of capital and is, therefore, contrary to European Union law. Section 89 of the Bill ensures that relief will apply to agricultural land situated in a member state of the European Union. The amendment to the definition of "farmer" in section 89(1) of the Act ensures that agricultural land situated in a member state of the European Union will qualify as agricultural property and that such property will qualify for 90% relief under this section.

This amendment, which the Minister introduced on Committee Stage in the other House, was required because while section 82 of the Bill as initiated ensured that relief at 90% applied to such assets, those assets could not qualify for relief if the bulk of the property comprised in a gift or inheritance was situated outside the State. The amendment corrects this anomaly and ensures that section 89 of the Capital Acquisitions Tax Consolidation Act 2003 is in conformity with European Union law.