Stamp duty risk for young farmers under new scheme

Niamh Dillon


Niamh Dillon


Stamp duty risk for young farmers under new scheme

Young farmers entering into a Succession Farm Partnership Scheme could be caught by stamp duty taxes despite a 2015 Department of Ag policy aimed to incentivise the handing over of farms from parents to children.

However conflicting age limits under the Succession Farm Partnership Scheme and a Stamp Duty exemption are now resulting in some farmers missing out on the tax incentives under the scheme.

The Succession Farm Partnership Scheme, which defines young farmers as under 40, offered farmers the opportunity to earn a tax credit of €5,000 per year for the first five years of the partnership but stipulated that 80 percent of the farmland had to be transferred between year three and year 10 of the agreement.

However the Stamp Duty exemption, which defines young farmers as under 35, conflicts with the Succession Farm Partnership precondition that land cannot be transferred until after year three. Therefore farmers aged 32 and over are penalised if they enter into the partnership as they are locked into the agreement for the duration of the farm partnership and the land cannot be transferred for a minimum of three years. 

In this case this means the young farmer will be over 35 leaving them liable to pay two percent stamp duty on any land transferred within the partnership rendering the incentives under the scheme meaningless. 

A spokesperson from the Department of Agriculture said that any moves to bring existing tax measures into line with the new age definition of young farmers will need “legislative change nationally and EU state aid approval.”

However the spokesperson said that the Minister for Finance has no plans to make any changes in this area at present but that the matter will be kept “under review” with appropriate liaison between the Department of Finance and Department of Agriculture.

It is an issue that would most likely be considered as part of a review of a tax measure in the context of a decision as to whether it will be renewed.

The stamp duty exemption for young farmers is currently scheduled to expire on December 31, 2018.