Thursday, February 09, 2012
QUESTION: I have been unable to renew some conacre that I was farming.
I farm 50 hectares of my own land, and have a total of 74 entitlements.
I was thinking of selling the 24 excess single farm payment entitlements, worth €600 per hectare.
What are my options, regarding stacking the entitlements, and what are the tax consequences if I sell the entitlements?
ANSWER: Your options for stacking the entitlements depend on the amount of land you farmed in the reference years.
Under the 2011 Single Farm Payment scheme, it was possible to stack your entitlements, so long as you declared enough hectares to match at least 50% of your total entitlements.
In your case, assuming you have farmed the same amount of land since the reference years, this rule would mean that you must farm at least 32 hectares in order to stack your entitlements.
There are other rules — you can’t stack if you have dropped any of the land which you owned since the reference years.
In other words, you can only consolidate as a result of losing rented land. Based on the information provided, stacking should be an option for you.
The rules on stacking, otherwise known as consolidation, are quite tricky, and you should check out the 2012 terms and conditions for the most up-to-date rules.
On the tax side, the sale of entitlements is subject to capital gains tax.
As you acquired the entitlements for no cost in 2003, you would be subject to capital gains tax at 30%, on the proceeds.
If the sales proceeds were to exceed €37,500, then you would need to register and charge VAT at a rate of 23%.
If you go down the stacking route, as a result of stacking, your remaining entitlements will have a higher value of €888 per hectare, instead of €600 per hectare. There is some speculation that the next round of CAP reform will adversely affect holders of higher value entitlements, but that would be phased in over a long number of years, if it happens.
As always, each individual’s circumstances should be looked at for the best advice.
Your questions on this and other tax issues are welcome.
© Examiner Publications (Cork) Limited, City Quarter, Lapps Quay, Cork. Registered in Ireland: 73385.
