Section 664 is a generous relief from tax on renting farmland – with the purpose to encourage landowners to lease land on a long term basis to active farmers. The relief exempts from tax certain income from leasing “qualified farmland” once a number of conditions including the following conditions have been satisfied:
There are four different levels of income exemption depending on the length of the lease term as follows:
Leases of Farmland for Solar Energy Development
The question has arisen as to whether certain leases involving solar farms can avail of Section 664. Revenue’s view is that a trade of farming for the purpose of the tax relief on leasing of farmland means that the lessee is required to farm the land on a commercial basis and with a view to the realisation of profits.
A lease of land to a solar energy company for the purpose of the installation of solar panels will not be regarded as a trade of farming for the purpose of section 664 TCA, notwithstanding that the company may agree to occupy some of the land around the solar panels for the purposes of husbandry.
Therefore, unless the solar company can demonstrate that they are carrying on two distinct businesses and that the land is wholly or mainly occupied for the purposes for husbandry, the relief will not be available.
If you would like to know more on this subject or any taxation matter, please do not hesitate to contact Maura Duffy, Partner, at firstname.lastname@example.org