Supporting young farmers and generational renewal continues to be a priority for both the Government and the EU, and will form an important part of the CAP post-2020. I understand that my colleague, the Minister for Agriculture, Food and the Marine, and his Department, are actively engaging with other Member States and the EU Commission on these issues during the current negotiations on the new CAP proposals.
I am advised by Revenue that Commission Regulation (EU) No. 702/2014 of 25 June 2014, commonly known as the Agricultural Block Exemption Regulation (ABER), is the Regulation under which certain categories of State aid can be granted for the agricultural and forestry sectors.
Article 18 of the ABER sets out the specific requirements for the granting of aid for young farmers and the development of small farms. It stipulates, inter alia, that the amount of aid per young farmer is to be limited to €70,000. This limit is a lifetime limit that applies to the cumulative aid received under all schemes covered by Article 18. The relevant schemes are:
- stock relief under section 667B Taxes Consolidation Act 1997;
- farm succession partnerships under section 667D Taxes Consolidation Act 1997; and
- transfers of land to young trained farmers under section 81AA Stamp Duties Consolidation Act 1999.
The ABER entered into force on 1 July 2014 and has had direct effect in all Member States since that date. The Finance Act 2018 contained provisions in respect of this €70,000 limit. This limit applies to claims for relief made in relation to stamp duty for transfers or conveyances of land executed on or after 1 January 2019, and for the year of assessment 2019 and subsequent years of assessment for stock relief and succession farm partnership relief. Anyone submitting a stamp duty return for conveyances or transfers of land executed on or after 1 January 2019, or income tax returns for the 2019 year of assessment onwards, must have regard to the amount of relief claimed since 1 July 2014. The total amount claimed over the period must not exceed €70,000.
I am also advised by Revenue that the inheritance of a family farm does not attract a stamp duty charge and, thus, is not affected by the €70,000 limit. In addition, Revenue is currently revising its published guidance manual on the stamp duty element of the relief to confirm that, where a young trained farmer receives or buys farmland from certain relatives and is eligible for ‘consanguinity relief’, this relief can be applied before the ‘young trained farmer’ relief on the transfer of the land. As consanguinity relief operates by charging a reduced 1% rate of stamp duty (instead of the usual 6% rate on farmland), the amount of relief allowed (i.e. State aid granted) would be significantly reduced for many young trained farmers and ensure that they don’t breach the €70,000 ceiling. The following example illustrates how this would apply:
A young trained farmer gets a gift of farmland from his father in January 2019 which for stamp duty purposes is valued at €1m. Consanguinity relief reduces the stamp duty liability from €60,000 (6% rate) to €10,000 (€1m @ 1%). Young trained farmer relief will then reduce the stamp duty liability of €10,000 to nil. €10,000 is the amount of State aid claimed.
Finally, any changes to the Regulation that gives rise to the lifetime cap can only be considered in the context of the CAP negotiations. In the meantime, the Government must seek to ensure, as with all EU Regulations, that the Regulation is enforced here, or we risk being in contravention of EU law.
