Entitlements selling well

SINGLE Payment entitlements have been sold for a multiple of 2.25 to 2.5 times their annual value, according to auctioneer John Dawson.

Writing in Real Life Magazine, the incoming President of the Irish Auctioneers and Valuers Institute, said new entrants to farming are much sought by sellers of entitlements, because there is no clawback when entitlements are sold, with or without land, to new entrants.

A new entrant is defined as a farmer who did not engage in farming within five years in his or her own name, or at his or her own risk. The new entrant must be at least 18-years-old on January 1, and must have appropriate qualifications if aged under 35.

Those aged over 35 must have the appropriate qualifications, or at least five years of experience in farming. Dealing with a new entrant avoids the clawback to a national reserve of between 2 and 30% of the entitlements.

And dealing with a seller of no more than €25,500 of entitlements per year brings advantages also, because the deal is free of VAT.

But the buyer must pay 21% VAT if the seller has sold more than €25,500 of entitlements within 12 months.

The seller has to charge the VAT and has to register for VAT.

The buyer can claim it back only if he or she is registered for VAT.

Sellers are also liable to 20% Capital Gains Tax on sale of entitlements, once they have exceeded the annual CGT-free threshold of 1270.