Written answers
Wednesday, 20 March 2024
Department of Finance
Tax Reliefs
Alan Farrell (Dublin Fingal, Fine Gael)
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272. To ask the Minister for Finance in a context where the Finance Act 2017 introduced relief on capital gains tax and capital acquisitions tax for landowners who have leased their land for the production of solar energy where the area of the land on which the solar panels are installed does not exceed half the total area of the land concerned, the reason a similar relief was not provided to landowners who have leased their land for the production of wind energy; if he will consider such a change to encourage the development of the onshore renewable energy needed to achieve the Government's climate action targets; and if he will make a statement on the matter. [13068/24]
Michael McGrath (Cork South Central, Fianna Fail)
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Prior to Finance Act 2017, agricultural land which 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 announced in Budget 2018, and in recognition of the then Government's commitment to facilitate the development of solar energy projects in Ireland, a revised approach was introduced whereby it is now 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.
While introducing this amendment, it was important that we did not lose sight of the fundamental principle which underpins our policy in relation to agricultural relief.
Allowing land leased for solar panels to be classified as qualifying agricultural property is an important element in encouraging solar energy projects. However, this must also be carefully balanced with the overarching objectives of this valuable relief which aims to encourage the inter-generational transfer of agricultural land which is being actively farmed.
Through the Climate Action Plan, Ireland has committed to delivering up to 80% of the State’s electricity from renewable sources by 2030, to be achieved through the delivery of onshore wind, offshore wind and solar energy.
In support of these targets there are already a number of supports in place which aim to accelerate the development of the renewable energy sector, including the renewable electricity support scheme, and measures which aim to develop micro and small-scale generation, through actions such as grant funding and enabling small-scale production to participate in energy markets.
The options available for setting CAT rules must, like all tax measures, be balanced against competing demands and considered as part of the annual Budget and Finance Bill process.
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