The INHFA has called for a temporary exemption on capital gains tax (CGT) liabilities that accrue from the sale of CAP entitlements in 2023 and 2024.

The hill farmer group claimed that the imposition of CGT at up to 33% was a major impediment to the transfer of entitlements from inactive to active farmers.

The Department of Agriculture recently flagged that it intends setting aside the 20% clawback on the sale of CAP entitlements without land during 2023 and 2024.

The move, which could impact close to 30,000 farmers, aims to encourage a shift in entitlements, through sale or increased long-term leasing, from “armchair farmers” to active producers.

However, the INHFA claimed that the current CGT liability on the sale of entitlements will limit the effectiveness and impact of the Department’s clawback concession.

We will hopefully see a significant transfer of entitlements to active farmers

“CGT which is currently applied on the sale value of entitlements at a rate of up to 33%, is an additional impediment towards the sale of entitlements,” said INHFA president Vincent Roddy.

“It is vital that we do everything possible to encourage the transfer of entitlements to active farmers.

“By adopting a twin approach of lifting the clawback and providing a tax exemption, both of which will have a limited timeframe, we will hopefully see a significant transfer of entitlements to active farmers,” he maintained.

The INHFA has also called for “additional consideration” to be given to the application of VAT on the sale of entitlements.

This clawback, which will start at 10% in year one and increase by 10% each year, should help to flush out a lot of entitlements

“While this will only apply to a small number of farmers who are trading entitlement values of over €37,500, the requirement to apply VAT at 23% adds to the complications for both seller and purchaser,” Roddy explained.

The INHFA welcomed proposals from the Department around the leasing of entitlements that will see a clawback on those leasing out over 80% of their entitlements.

“This clawback, which will start at 10% in year one and increase by 10% each year, should help to flush out a lot of entitlements that are currently being sat on and traded each year to the benefit of everyone except the farmer on the ground that is doing the work,” Roddy said.