I’ve been farming with my parents since the land was transferred into my name a few years ago. My boyfriend and I are planning to spend a couple of years in New Zealand. While I’ll be abroad, the land at home will still be generating some income. I’m unsure how this affects my tax position.
Will I still need to file an Irish tax return while I’m away? And more importantly, could being out of the country put any of the tax reliefs I claimed on the land transfer at risk?
ANSWER: This is a very common situation for younger farmers who take on land early and then spend time abroad. The short answer is yes – in most cases, you will still have Irish tax obligations while you’re away.
Irish tax while you’re abroad
Even if you become non-resident for Irish tax purposes, Irish-source income remains taxable here. So, if the land is still in your name, or you’re getting rent from it, an Irish income tax return will still be required.
Tax residence is mainly determined by day count – broadly, spending fewer than 183 days in Ireland in a year, or fewer than 280 days over two years, can make you non-resident. But non-resident does not mean “out of the system”.
Once you become tax resident in New Zealand, you’ll generally be taxed there on your worldwide income. Ireland and New Zealand have a Double Taxation Agreement, meaning Irish income is taxed here first, with a credit usually given in New Zealand. This avoids double tax, but returns are required in both countries.
Tax relief
Most problems arise with reliefs claimed when the land was transferred. These reliefs must continue to meet their conditions for at least six years after the transfer, otherwise Revenue can claw them back – often long after the move abroad.
While the two reliefs often apply to the same land, the ongoing conditions are not the same, and that difference really matters if you are leaving the country.
For Agricultural Relief, the land must continue to qualify as agricultural property. Once you leave Ireland, it becomes very difficult to meet the “active farmer” test personally. In practice, a properly structured long-term lease to a qualifying active farmer is usually essential to protect the relief.
Business Relief is stricter. The land must continue to be used by you in a genuine farming business carried on a commercial basis. Unlike Agricultural Relief, simply owning the land or holding qualifications is not enough.
Managing a farming trade from the other side of the world can be challenging, and if Revenue take the view that the land is no longer being actively used in a farming trade by you, Business Relief can also be clawed back.
Why leasing can be the key
For farmers going abroad, the practical question is simple: what happens to the land while you’re gone?
A properly structured lease to a qualifying active farmer will usually protect Agricultural Relief. Business Relief presents a different scenario, and in many cases it may not be possible to fully prevent a clawback of the relief. Leaving land idle, or in informal arrangements that don’t meet Revenue’s conditions, is where problems arise.
These clawbacks don’t happen immediately. They often surface years later, when a Revenue review takes place or when the land is being sold or transferred again. By then, the tax bill can be substantial and completely unexpected.
What about stamp duty reliefs?
Similar issues arise with stamp duty reliefs. Young Trained Farmer Relief, in particular, requires you to farm full-time yourself, or through a qualifying company in which you hold at least a 20% shareholding and work a minimum of 20 hours per week for a period of five years. This often catches people out, as a clawback can arise years after the original transfer.
Consanguinity Relief may be clawed back if you stop farming the land yourself, but leasing the land under a qualifying lease to an active farmer can allow the relief to be retained.
The bottom line
Time spent abroad doesn’t end your Irish tax responsibilities, and it can put valuable reliefs at risk if the land isn’t farmed or leased correctly.
A conversation with your adviser before you leave to go overseas can save a lot of money – and a lot of sleepless nights – down the line.
Records still matter. Even if you’re abroad, your record-keeping obligations don’t stop. You should retain the following:
Details of all income from the land, including rents or grazing fees.Expenses paid on the farm.Lease agreements, where the land is let.Bank statements showing farm transactions.Copies of tax returns filed in Ireland and New Zealand.Having someone at home – a family member or adviser to keep an eye on paperwork can prevent small issues becoming expensive problems.
Marty Murphy, Head of Tax, ifac.
Marty Murphy is head of tax at ifac, the professional services firm for farming, food and agribusiness.
I’ve been farming with my parents since the land was transferred into my name a few years ago. My boyfriend and I are planning to spend a couple of years in New Zealand. While I’ll be abroad, the land at home will still be generating some income. I’m unsure how this affects my tax position.
Will I still need to file an Irish tax return while I’m away? And more importantly, could being out of the country put any of the tax reliefs I claimed on the land transfer at risk?
ANSWER: This is a very common situation for younger farmers who take on land early and then spend time abroad. The short answer is yes – in most cases, you will still have Irish tax obligations while you’re away.
Irish tax while you’re abroad
Even if you become non-resident for Irish tax purposes, Irish-source income remains taxable here. So, if the land is still in your name, or you’re getting rent from it, an Irish income tax return will still be required.
Tax residence is mainly determined by day count – broadly, spending fewer than 183 days in Ireland in a year, or fewer than 280 days over two years, can make you non-resident. But non-resident does not mean “out of the system”.
Once you become tax resident in New Zealand, you’ll generally be taxed there on your worldwide income. Ireland and New Zealand have a Double Taxation Agreement, meaning Irish income is taxed here first, with a credit usually given in New Zealand. This avoids double tax, but returns are required in both countries.
Tax relief
Most problems arise with reliefs claimed when the land was transferred. These reliefs must continue to meet their conditions for at least six years after the transfer, otherwise Revenue can claw them back – often long after the move abroad.
While the two reliefs often apply to the same land, the ongoing conditions are not the same, and that difference really matters if you are leaving the country.
For Agricultural Relief, the land must continue to qualify as agricultural property. Once you leave Ireland, it becomes very difficult to meet the “active farmer” test personally. In practice, a properly structured long-term lease to a qualifying active farmer is usually essential to protect the relief.
Business Relief is stricter. The land must continue to be used by you in a genuine farming business carried on a commercial basis. Unlike Agricultural Relief, simply owning the land or holding qualifications is not enough.
Managing a farming trade from the other side of the world can be challenging, and if Revenue take the view that the land is no longer being actively used in a farming trade by you, Business Relief can also be clawed back.
Why leasing can be the key
For farmers going abroad, the practical question is simple: what happens to the land while you’re gone?
A properly structured lease to a qualifying active farmer will usually protect Agricultural Relief. Business Relief presents a different scenario, and in many cases it may not be possible to fully prevent a clawback of the relief. Leaving land idle, or in informal arrangements that don’t meet Revenue’s conditions, is where problems arise.
These clawbacks don’t happen immediately. They often surface years later, when a Revenue review takes place or when the land is being sold or transferred again. By then, the tax bill can be substantial and completely unexpected.
What about stamp duty reliefs?
Similar issues arise with stamp duty reliefs. Young Trained Farmer Relief, in particular, requires you to farm full-time yourself, or through a qualifying company in which you hold at least a 20% shareholding and work a minimum of 20 hours per week for a period of five years. This often catches people out, as a clawback can arise years after the original transfer.
Consanguinity Relief may be clawed back if you stop farming the land yourself, but leasing the land under a qualifying lease to an active farmer can allow the relief to be retained.
The bottom line
Time spent abroad doesn’t end your Irish tax responsibilities, and it can put valuable reliefs at risk if the land isn’t farmed or leased correctly.
A conversation with your adviser before you leave to go overseas can save a lot of money – and a lot of sleepless nights – down the line.
Records still matter. Even if you’re abroad, your record-keeping obligations don’t stop. You should retain the following:
Details of all income from the land, including rents or grazing fees.Expenses paid on the farm.Lease agreements, where the land is let.Bank statements showing farm transactions.Copies of tax returns filed in Ireland and New Zealand.Having someone at home – a family member or adviser to keep an eye on paperwork can prevent small issues becoming expensive problems.
Marty Murphy, Head of Tax, ifac.
Marty Murphy is head of tax at ifac, the professional services firm for farming, food and agribusiness.
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