As the Deputy may be aware, prior to Finance Act 2017 agricultural land which was leased for solar panels was not classified as qualifying agricultural property for the purposes of Capital Gains Tax retirement relief or agricultural relief from Capital Acquisitions Tax.
Following a review announced in Budget 2018, and in recognition of the then Government's commitment to facilitate the development of solar energy projects in Ireland, a revised approach was introduced whereby it is now possible for land leased for the installation of solar panels to be classified as qualifying agricultural property under certain conditions. A key condition is that the total area of land under lease and on which solar panels are installed does not exceed 50% of the total area of agricultural land.
While introducing this amendment, it was important that we did not lose sight of the fundamental principle which underpins our policy in relation to agricultural relief and retirement relief.
I recognise that allowing land leased for solar panels to be classified as qualifying agricultural property is an important element in encouraging solar energy projects. However, this must also be carefully balanced with the overarching objectives of this valuable relief which aims to encourage the inter-generational transfer of agricultural land which is being actively farmed.
My colleague, the Minister for Agriculture, Food & the Marine, Charlie McConalogue TD informs me that support under the Basic Payment Scheme (BPS) is payable upon activation of an eligible hectare per payment entitlement. In general terms an eligible hectare is one that is used for an agricultural activity or, where the area is also used for a non-agricultural activity, is predominantly used for such activities. An area is predominantly used for agricultural activity if that activity can be exercised without being significantly hampered by the intensity, nature, duration and timing of the non-agricultural activity.
While cases involving solar panels will be examined on an individual basis, it is currently envisaged that the area covered by the solar panels will be deemed ineligible for the purposes of claiming BPS. Furthermore, in line with the Department of Agriculture, Food & the Marine’s current approach on land eligibility, where the area of a parcel covered by solar panels is 70% or greater of the overall parcel, that parcel will be wholly ineligible. If less than 70% is covered by solar panels and the agricultural activity is not hampered by the presence of the solar panels, the area not covered by solar panels may be eligible.
