Alan Farrell (Dublin Fingal, Fine Gael)
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385. To ask the Minister for Finance if his attention has been drawn to the challenges facing the renewables industry on the issue of capital acquisitions tax given that it applies to lands used for solar farms; and if he will make a statement on the matter. [29532/22]

Paschal Donohoe (Dublin Central, Fine Gael)
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As the Deputy may be aware, agricultural relief allows the value of agricultural assets gifted or inherited (including farmland, buildings, stock) to be reduced by 90% of its value for the calculation of a Capital Acquisition Tax (CAT) liability. This is a valuable relief from CAT and a fundamental objective of this relief is that it is availed of by genuine, and active farmers, and that it relates to agricultural land which is being actively farmed.

One of the key conditions for agricultural relief is that agricultural property must make up at least 80% of a beneficiary’s total property. Prior to the changes made in Finance Act 2017, any land leased for solar panels was not classified as agricultural land and therefore could not be counted towards satisfying this 80% threshold.

In recognition of the then Government’s commitment to facilitate the development of solar energy projects in Ireland and the potential role of farmland in achieving this, an amendment was made to allow land leased for solar panels to be classified as qualifying agricultural activity under certain conditions.

While introducing this amendment, it was important that sight was not lost of the fundamental principle which underpins agricultural relief policy, namely to support the intergenerational transfer of family farms and to encourage succession planning. Therefore, a key aspect of this relief is to ensure that it is targeted at land which is actively farmed. Consequently to facilitate the above policy objectives, the amendment included a condition that in order to be classified as qualifying agricultural activity, the total area under lease for solar should not exceed 50% of the total area of agricultural land.

This addressed any potential disincentive to leasing land for solar panels, while also preserving the integrity of this significant CAT relief.

Jackie Cahill (Tipperary, Fianna Fail)
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386. To ask the Minister for Finance if a property owner would still be liable for a vacant property tax in the case where they own land that is zoned for residential development but cannot secure a purchaser for the property; and if he will make a statement on the matter. [29592/22]

Paschal Donohoe (Dublin Central, Fine Gael)
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As the Deputy is aware, Finance Act 2021 introduced Part 22A Residential Zoned Land Tax (RZLT) into the Taxes Consolidation Act 1997. The RZLT is designed to prompt residential development by owners of land that is zoned for residential or mixed-use purposes and that is serviced. The RZLT is an annual tax, calculated at a rate of 3% of the market value of the land.

Each local authority will prepare and publish a map identifying land within the scope of the tax. The first draft map will be published by the local authorities on 1 November 2022.

The tax will be due and payable in May 2024 in respect of land which was suitable for residential development on 1 January 2022 because it was both zoned and serviced on that date, and on which development has not commenced before 1 February 2024. Where land becomes both zoned and serviced after 1 January 2022, tax will be chargeable in the third year after it comes within the scope of the tax.

There are a limited number of exclusions from the tax, including residential dwellings and their gardens and land which is zoned for a mixture of residential and other uses (and not purely for residential development) that is integral to the operation of a business carried out on or beside it.

If a landowner believes that their land should not be zoned as suitable for residential development, they can make a submission to the local authority seeking to have the land rezoned. The local authority will consider the submission and, if appropriate, they will commence a variation procedure to alter the zoning of the land. This variation procedure, and the local authority’s decision on whether or not to commence one, is part of the normal zoning process.

The tax may be deferred in certain circumstances, including where residential development is commenced. Tax deferred while residential development is ongoing, will, on the making of a claim, not be payable where development is completed within the timeframe set out in the planning permission and a certificate of completion is in place.

Where a site that is subject to RZLT is for sale, in the period until the sale is completed, the original owner is liable for the tax. Before the sale of a property is completed, the vendor is required to pay any unpaid RZLT due in respect of a liability date falling before the date of sale and to submit any outstanding returns.