Karen Walsh: Partnerships can work even better when transfer version is introduced

Farmer collaboration has existed in Ireland for generations, such as the annual harvest threshing.

Karen Walsh: Partnerships can work even better when transfer version is introduced

Collaborative farming arrangements offer a potential route to gaining access to a broad range of resources, such as land, facilities, skills, labour efficiency, superior lifestyle, companionship, economies of scale, and the potential for higher profits.

Farm partnerships are one such area, where farmers can combine their farming operations into one bus- iness.

The partners share, on agreed terms, the profit which the enterprise makes.

Partnerships allow farmers to combine their resources, such as land, labour, facilities, machinery etc. for the mutual benefit of all the parties involved.

Some of the benefits include improved lifestyle, increased economies of scale and greater labour availability.

One of the main benefits is the use of partnership as a transition arrangement to steer the farm family through the succession process, until a full farm transfer to a son or daughter takes place, at a later date.

Partnership allows for a gradual introduction of the successor, in a formal way, into the farming business over the lifetime of the arrangement.

In addition, the Revenue Commissioners and the Department of Agriculture, Food and the Marine have taken a favourable approach towards registered farm partnerships, the key issue being that each farmer in the arrangement should be treated no less favourably than a farmer farming on his or her own.

All qualifying farmers in a registered partnership are treated as individuals for tax purposes and EU and government support schemes.

Succession Farm Partnerships (Pending)

As part of Budget 2016, the government proposed a scheme for a new farm succession transfer model partnership.

The relief is subject to state aid rule approval by the EU, and will come into operation once the commencement order has come into effect.

The purpose of this proposed scheme is to encourage older farmers to form partnerships with young trained farmers and to transfer ownership of the farm, within three to ten years, to that young trained farmer.

The partners are entitled to an annual €5,000 tax credit divided between them in accordance with the profit-sharing ratio specified in the agreement.

The credit can be claimed for a maximum of five years from the date on which the partnership is registered.

The credit cannot be claimed in any year where the successor has reached 40 years of age.

In order to be registered, and to avail of the tax credits and grants available, the partnership must comply with all of the following conditions:

n The farm partnership must have at least two members, each of whom is a natural person, which means they cannot be a limited company.

n Of the members of the farm partnership, at least one partner (that is, the farmer) must have been farming on at least three hectares for a minimum of two years immediately before the formation of the partnership.

Of the others, each partner (that is, the successor) must have an agricultural qualification (the “Green Cert” or its equivalent) and be entitled to at least 20% of the profits of the partnership, and should not have reac- hed 40 years before registration.

n Approval must be obtained from the minister of agriculture, food and the marine for the business plan of the farm partnership before making an application for registration.

n The farmer must enter into an agreement with the successor to transfer at least 80% of the farm assets to the successor within 10 years of the commencement of the partnership.

The transfer can begin after year three.

n The terms of the partnership agreement shall include:


The farm assets of the partnership on the day of application for registration.


Any conditions to which the transfer will be subject.


The year in which the proposed transfer may take place.


Any other terms agreed between the farmer and successor, such as the conduct of the farming trade or creation of any rights of residence in dwellings on the land.

n If at least 80% of the farm assets are not transferred within the 10-year deadline, there will be a clawback of the tax credits claimed.

As with all collaborative farming arrangements, it is critical that a written agreement is put in place before the arrangement commences and that advice is sought from a tax consultant or accountant in advance of entering into any agreement.

Karen Walsh, from a farming background at Grenagh, Co Cork, is a solicitor practicing in Walsh & Partners, Solicitors and Commissioners for Oaths, 17, South Mall, Cork.

Telephone: 021-4270200

Email: info@walshandpartners.ie

Web: www.walshandpartners.ie

While every care is taken to ensure accuracy of information contained in this article, solicitor Karen Walsh does not accept responsibility for errors or omissions howsoever arising, and you should seek legal advice in relation to your particular circumstances at the earliest possible time.

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