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.

I currently have no plans for reviewing this matter.