The classification of land leased for solar panels as qualifying agricultural property for agri-relief is an important element in encouraging solar energy projects, Minister for Finance, Paschal Donohoe has said.

However, this must be balanced with the benefits of agricultural and retirement relief, which aim to encourage the inter-generational transfer of agricultural land that is actively farmed, he said.

Following a review announced in Budget 2018, it is possible for land leased for the installation of solar panels to be classified as qualifying agricultural property under certain conditions.

A key condition, however, 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, according to the minister.

“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,” he said.

The minister said prior to the Finance Act 2017, agricultural land that 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 (CAT).

Minister Donohoe made his remarks in response to a parliamentary question raised by Fine Gael TD Colm Burke, who asked if land and holdings that constitute up to 100% will qualify to assist in meeting Ireland’s renewable targets.

Department officials recently engaged with the Department of Agriculture, Food and the Marine (DAFM); the Department of Energy, Climate and Communications (DECC); and Revenue on the matter, as well as other solar energy policy measures, the minister said.

CAT

Meanwhile, the Commission on Taxation and Welfare recommended a cut in agricultural relief under the CAT, though without specifying a different rate of relief.

The commission is also recommending that the threshold above which CAT is applied in parent-to-child property transfers be “substantially reduced” from the current figure of €335,000.

It is understood that its recommendations will be considered by Minister Donohoe before Budget 2023. Farm organisations had previously expressed concern that the agricultural relief on CAT would be reduced from 90% to 80%.