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Ireland Publishes Solar Panel Tax Review Findings

by Jason Gorringe,, London

25 October 2017

The Irish Government has published the results of a review into the tax treatment of solar panels installed on farmland.

The Government committed to the review in 2016. As announced in the latest budget, it has been decided that solar panels on agricultural land will be considered qualifying assets for certain capital gains tax (CGT) and capital acquisitions tax (CAT) reliefs.

Agricultural land placed under solar infrastructure will continue to be classified as agricultural land, whereas under the old rules it would no longer have been deemed as such. However, the amount of farmland that can be used for solar infrastructure will be restricted to 50 percent of the total farm acreage.

The review was conducted by an informal working group comprised of officials from the Finance Department, Revenue, the Department of Agriculture, Food, and the Marine, and the Department of Communications, Climate Action, and Environment.

The resulting report set out three options for the CAT/CGT treatment of the installation of solar panels on agricultural land. These were: no change to the current situation; permitting the leasing of agricultural land for solar developments to be classified as agricultural activity for the purposes of CAT/CGT without additional qualifications; and permitting such classification, but with additional qualifications.

Among the advantages identified in the third option – the option chosen by the Government – was that farmers would be free to enter into contracts for the lease of farmland to solar developers, subject to planning and grid access.

The review found that "while solar developments on farms will inevitably reduce agricultural production from current levels, the 50 percent condition will at least discourage passive farming." Farmers would "not be able to rely entirely on rental income" and would have to "engage in genuine agricultural activity on part of their farm."

TAGS: capital gains tax (CGT) | environment | tax | Ireland | tax thresholds | tax breaks | tax reform

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