Éamon Ó Cuív (Galway West, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

47. To ask the Minister for Finance if he will give any special relief from income tax to those who are forced to sell their entitlements due to the EU rules on leased entitlements under the new Common Agricultural Policy 2014-2020; and if he will make a statement on the matter. [19812/14]

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I assume the Deputy is referring to single farm payment entitlements. There are potential tax implications arising from the disposal of such entitlements, mainly capital gains tax (CGT) and VAT.

A single farm payment entitlement is a chargeable asset for capital gains tax (CGT) purposes and once acquired it may be disposed of by way of sale, gift etc. Accordingly, gains arising from the disposal of single farm payment entitlements are chargeable to CGT in the same way as gains made on any other chargeable assets. Where total gains in any year do not exceed €1,270 they are not chargeable to CGT.

With regard to the transfer of single farm payment entitlements for VAT purposes, where a payment entitlement is sold without land then VAT is due at the standard rate on the sale if the sale proceeds exceed the relevant threshold for VAT registration (currently €37,500). However, where a payment entitlement and land are sold together to a person who intends to carry on the farming business, then the sale may be treated as the transfer of a business and not subject to VAT. There may be other less significant tax implications in certain instances.

I have no discretion under EU law to provide for a VAT exemption on the disposal of the payment entitlement assets. Having considered the matter, however, I was prepared to provide for an exemption from CGT on any chargeable gains arising from the disposal by the owners of payment entitlements under the Single Payment Scheme where all of those entitlements were leased out in 2013 and where the owners, because of the change in CAP regulations, were advised by the Department of Agriculture, Food and the Marine, to transfer their entitlements to an "active" farmer by 15 May 2014. I made an announcement to this effect earlier today.

I propose to include appropriate provisions to give effect to the CGT exemption in Finance Bill 2014 which will be published shortly after Budget 2015 in the Autumn. While the CGT due on any chargeable gains arising from the disposal of farm payment entitlements made by 15 May would have to be paid in the normal course by 15 December 2014, the Revenue Commissioners have indicated that they will not require such payments to be made pending the passing of the Finance Bill and the coming into law of the relevant CGT amendments to be included in that Bill.