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Minister for Finance blames EU rules for €70k cap on agri-tax benefits


Minister for Finance Pascal Donohoe. Photo: Kyran O'Brien

Minister for Finance Pascal Donohoe. Photo: Kyran O'Brien

Minister for Finance Pascal Donohoe. Photo: Kyran O'Brien

Young trained farmers face a cap in the level of farming supports they can avail of at reduced tax rates.

The Minister for Finance, Pascal Donohoe has blamed EU state aid rules for a cap introduced after the Budget on certain tax reliefs.

The Finance Bill introduced a cumulative €70,000 lifetime cap on the benefit any one farmer can receive under three farming related tax reliefs (the young trained farmer stamp duty relief, stock relief for young trained farmers and succession farm partnerships).

Minister Donohoe said he is aware of the concerns raised by the farming bodies over the issue. However, he said the origin of the €70,000 cap lies in EU law.

He said EU regulations introduced in 2014 provide for state aid rules concerning start-up aid for young farmers and the development of farms.

The regulations provide that “the aid amount per young farmer shall be based on the socioeconomic situation of the Member State concerned and shall be limited to €70,000”.

This means that the maximum aid amount allowed under the three schemes is €70,000 per each farmer who qualifies for the relief.

Minister Donohoe said EU state aid regulations are legal acts that have a direct effect in all EU countries and can be enforced directly by the European Commission regardless of domestic Irish law.

“Ireland does not, therefore, have the power to vary the limit.

“Introducing the cumulative €70,000 limit in national legislation is designed to provide clarity on how the limit applies in relation to the three reliefs,” the Minister said.

Macra President James Healy has described the move as "very disappointing".

"(It's) Very disappointing that this has been introduced with no warning. It raises a number of questions in general but in particular for young farmers who have based their business plans on availing of these reliefs. I think this will have a huge impact on the average farmer," he said.

“Our understanding was that the Young Farmer Stamp Duty relief and Stock relief had been renewed to 2021, and there was no mention of a cap.

“This now negates the benefit of the Young Farmer Stamp Duty relief as most farmers would have used most of the €70,000 relief,” he said.

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