Children or nieces/nephews due to be gifted or inherit land often do the Green Cert. Sometimes it is of benefit, sometimes not, especially if the child is 35 years or older or intends to lease out the land rather than farm it themselves. In this article we explore the situations in which the Green Cert is worth doing and the situations where it may not be.
There are certain tax and EU/Department of Agriculture scheme benefits associated with doing the Green Cert. Of course, there are many educational benefits of doing the Green Cert too as it provides a mix of theoretical and practical training. However, the focus of many is on the tax/scheme savings, but these are only available in limited situations.
Stamp duty is payable on land transferred by deed, such as a gift from a parent to child or land being bought on the open market. The current rate of stamp duty on agricultural land is 7.5% of the market value of the land. If you take the average farm of 82.5 acres valued at an average price of €11,906 per acre, this equates to a stamp duty bill of €73,668. However, the young trained farmer stamp duty relief serves to reduce this stamp duty bill to €3,668 as there is a cap of €70,000 on EU state aid for young trained farmers.
To obtain the stamp duty relief (meet the definition of a “young trained farmer”), the following conditions must be satisfied:
If the farmer cannot claim the young trained farmer relief, all is not lost and they might be entitled to claim another relief called consanguinity relief whereby the rate of stamp duty is 1% as opposed to 7.5%. Using our previous example of 82.5 acres valued at €11,906 per acre, this equates to a stamp duty bill of €9,822. A farmer does not have to have the Green Cert to claim consanguinity relief. To obtain consanguinity relief, the following conditions must be satisfied:
Not worth doing
The following scenarios illustrate where it may not be worth doing the Green Cert:
A child/favourite niece/nephew can be gifted/inherit up to €335,000 before they incur gift/inheritance tax. As the average family farm transfer well exceeds this value, typically a child must qualify for either agricultural relief or business relief to avoid any gift/inheritance tax.
A condition of claiming agricultural relief is that the child/niece/nephew etc must either farm the land for six years or lease it to a farmer for six years. If the child does not have the Green Cert and they intend to farm it, they must spend 50% of their normal working time farming the land for six years from the date of the transfer. However, in my experience, most people inheriting or being gifted farms working full-time off-farm prefer to lease it out and claim the income tax lease exemption, so again there is no benefit to having done the Green Cert to claim agricultural relief in this scenario.
Young Farmer Top-Up
A farmer has to have the Green Cert in order to claim the Young Farmer Top-up. This typically equates to a top up on entitlements of approximately €68 per hectare up to a maximum of 50 hectares – €3,400 per year for a maximum of five years. However, it is envisaged that this will be increased to an average of €175/ha under the new CAP in 2023 – up to €8,750 per year for a maximum of five years. So, it is useful to have the Green Cert in this scenario, assuming the person who inherited or was gifted the land is farming as opposed to leasing it out.
Entitlements under the National Reserve
Again, a farmer has to have the Green Cert in order to claim entitlements under the National Reserve. Historically, more often than not, a young farmer will fall foul of the off-farm income limit of €40,000, especially if he/she is working off-farm full-time. However, this off-farm income limit was removed this year following an EU ruling. To claim entitlements under the National Reserve, the land either has to have no entitlements (which would be unusual) or below the national average.
Registered farm partnership
Many parents/children wish to form registered farm partnerships to avail of double the TAMS grant. Currently the TAMS grant would amount to 40% grant on maximum capital expenditure spend of €80,000, ie a €32,000 grant. This is due to increase to €90,000 per holding in the new CAP in 2023. But by forming a registered farm partnership with a young trained farmer who has the Green Cert, the partnership can qualify for a further €48,000 grant on a further €80,000 capital expenditure spend. So, a building costing €160,000 would qualify for a grant of €80,000 if an existing farmer forms a partnership with a young trained farmer. This 60% grant is also to be extended to female farmers between the ages of 40 and 66 years in 2023, subject to conditions.
To form a registered farm partnership there must be at least two people, one person from category (i) below and one or more person(s) from categories (i) or (ii):
(i) a person who has been engaged in the trade of farming on farm land owned or leased by that person, consisting of at least three hectares of useable farm land, for at least two years immediately preceding the date of formation of the partnership, and
(ii) A natural person with an appropriate agriculture qualification, ie the Green Cert, whose contribution to the farm partnership entitles him/her to at least 20% of the profit-sharing arrangement; and who works in the farm partnership for at least 10 hours per week.
So again, a child does not have to have the Green Cert to form a registered farm partnership, but if they don’t, they should be able to prove that they were farming in their own right for two years prior to forming the partnership by having a herd number in their own name.
If a young person is going to farm full-time, I would certainly advise them to do the Green Cert at least, but a third-level or full-time course at agricultural college would probably be more beneficial. This would enable them to gain more practical and academic experience.
If a young person is not planning on farming the land instead preferring to lease it out, there is probably not much benefit to them doing the Green Cert.
If a young person intends to farm part-time, the circumstances of the case will dictate whether it is worth doing the Green Cert or not. For example, if the land to be transferred is worth more than €400,000 and the person will have the Green Cert and the land transferred before they are 35 years of age, there is a financial gain from doing the Green Cert. However, this must be weighed up against the time constraints in actually doing the course. Factor in doing course work and practical days while juggling a full-time job and small kids and the cost savings might be quickly eroded. Further information on the courses available at www.teagasc.ie/publications/2019/green-cert-options.php