Stamp Duty relief for long-term leases and farm consolidation to be signed into law

Ciaran Moran

Ciaran Moran

Following consultation with the EU Commission on State Aid clearance, a commencement order will be signed for the Stamp Duty relief for farm consolidation, which was contained in Finance Act 2017.

For the relief to operate, there must be both a sale and a purchase of land within a period of 24 months of each other.

Where other qualifying conditions are satisfied, stamp duty will only be paid to the extent that the value of the land that is purchased exceeds the value of the land that is sold.

A reduced rate of 1pc will be charged on the excess, if any, of the purchase value. If the sale takes place before the purchase, then relief will be given at the time of purchase.

However, if the purchase takes place first, then stamp duty will have to be paid but can subsequently be refunded when the sale takes place.

A number of qualifying conditions must be satisfied before the relief can apply.

The most important condition is that Teagasc must issue a certificate stating that a sale and purchase or an exchange of farmland was made for farm consolidation purposes.

This is the certificate that is currently required in relation to the capital gains tax relief.

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The criteria to be used by Teagasc for this purpose and the information to be supplied to Teagasc are contained in guidelines published by the Minister for Agriculture, Food and the Marine.

A purchaser of farmland must retain ownership of the farmland for a period of five years and must use the land for farming.

Where any part of the land is disposed of before the end of this five-year holding period, the stamp duty relieved can subsequently be recovered by Revenue, or partly recovered as appropriate.

The measure will apply to all transactions which took place on or after 01 January 2018, so farmers who consolidate their holdings prior to the commencement of the relief will still be eligible.

Long-term leases

In addition, The Minister for Agriculture, Food and the Marine, Micheal Creed T.D., and the Minister for Finance and Public Expenditure, Paschal Donohoe T.D., today announced that administrative arrangements have now been finalised to allow commencement of the Stamp Duty relief for long-term leases.

Stamp Duty Relief for long-term leases is a full relief on Stamp Duty payable on long-term leases of farmland and was a recommendation of the Agri-Taxation Review. The delay in commencing this measure was due to finalising administrative arrangements for collecting EU State Aid data, which necessitated legislative change.

Minister Creed stated, “I am pleased that the commencement of the consolidation relief completes the package of measures I agreed with Minister Donohoe following the increase of the general stamp duty rate in the last Budget. Consolidation Relief is important environmentally and economically for farmers seeking to consolidate fragmented holdings”.

He added, “I am also pleased that we can introduce the Stamp Duty Relief for long-term leases, which is part of a package of measures promoting long-term leasing and increases the mobility and the productive use of farmland. This is especially important for young farmers and those seeking to increase the productivity of their farm”.

Minister Donohoe stated, “I am pleased to commence these two measures, involving a Stamp Duty relief for farm consolidation and a Stamp Duty relief for long-term leases. The agricultural sector and the wider rural economy are vital to the success and well-being of our country. Both of these measures should work to support sustainable rural development, vibrant and sustainable communities and promote the productive use of farmland”.

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