Europe likely to accept stallion tax exemption phase-out
Finance Minister Brian Cowen announced in his December 7 Budget that he was ending the controversial exemption - in place since 1969 - following a ruling from the EU Agriculture Commission that it was an illegal state aid and should be abolished.
But the minister gave stallion and stud owners what was described as a “soft landing” by allowing the scheme to continue until July 31, 2008.
Mr Cowen also indicated that, in the meantime, he would be exploring new taxation arrangements for the industry - a hint that an alternative incentive may be introduced.
“These will be subject to discussions in due course with the EU Commission,” Mr Cowen said on Budget day.
The Irish Examiner has been told informally by reliable sources within the EU that Agricultural Commissioner Mariann Fischer Boel is likely to accept the proposal, notwithstanding the long phase-out period.
Mr Cowen’s budgetary measures have yet to be examined in detail by the commission, they say, and EU lawyers may very well raise objections to the continuation of the incentive for two and a half years.
However, politically, the most important principle from the commission’s point of view is that Ireland has agreed to abolish the scheme and to phase it out over a reasonable time frame. It is not expected to press the Government to shorten that period, given that the principle of the ruling has been accepted.
The Revenue Commissioners said this week that they are not yet in a position to quantify the amount of tax lost to the Exchequer as a result of the exemption each year.
Stallion owners were asked to file tax returns for profits from stud nominations for the first time in 2004.
The only estimates available were collated two years by consultants, Indecon, who estimated the overall figure of tax foregone as €3 million per year.
