The definition of an active farmer is something that has come into focus in recent years, with family farmers across Europe resentful that supports they feel should be ringfenced for family farm units instead going to larger, more corporate-type agricultural businesses.
Last November, Christophe Hansen, now the European Commissioner for Agriculture and Food, described it as “unacceptable” that billionaires benefit from CAP when small farmers were not being adequately supported.
Hansen said: “When you read articles... on billionaires getting billions, literally, of public money, of taxpayers’ money, that is not the CAP I want to stand for.
“We really need to look as well at the definition of farmers, which is not the same in all the member states,” he added.
Europe’s young farmer organisation, CEJA, of which Macra is a member, has also called for a better “active farmer” definition across the EU.
Commissioner Hansen’s recent CAP 2028 proposals were less than clear about how Brussles wants to define active farmers, and by extension, their eligibility for CAP payments.
The initial wording suggests that a farmer could be defined as someone whose “principal activity” is agriculture, referring to thresholds relating to a farm income’s share of total income or farm labour requirements.
Part-time farmers
In Ireland, where a large cohort of farmers are part-time, and in many cases earn more from their off-farm job than they do from farm outputs, the final wording could have significant impacts on accessing CAP supports.
Closer to home, the definition of an active farmer came into sharp focus in Ireland following last October’s budget, when the Finance Act 2024 brought in Section 89A to replace Section 89 CATCA 2003, which contains the relief known as Agricultural Property Relief (APR).
Accountancy firm ifac described this as the single most important Capital Acquisitions Tax relief available to farmers.
The change was to impose an ‘active farmer’ test on not just the person receiving land, but on the person giving the land, known as the disponer.
It also removed the ability of a disponer to convert cash into agricultural assets using conditional gifts or bequests.
The purpose of these two changes, Government ministers said, was to reduce the instance of high-net-worth individuals purchasing lands to avail of relief.
As then-Minister for Finance Jack Chambers announced, he intended the change to address “concerns that Agricultural Relief is being used as part of tax planning strategies by wealthy individuals”.
Then-Minister for Agriculture Charlie McConalogue didn’t leave a tooth in it when he said: “We don’t want high rollers coming in and buying land at the cost of local farmers and young farmers who want to grow the farming enterprise.”
Farm organisations and finance experts immediately warned of the potential unintended consequences, and within a month the changes were put on hold – and remain on hold as Budget 2026 approaches.
Ifac, in its submission to the Commission on Generational Renewal, warned that tax changes that may look like they would prevent wealthy individuals using land and agricultural reliefs to pass on wealth, could have major unintended consequences.
It said that attempting to differentiate between “high rollers” and “local farmers” was dubious.
“The implication is that these high rollers aren’t farmers. The Capital Acquisitions Tax Consolidation Act 2003 is no place to introduce a definition of a farmer vs a high roller,” the firm cautioned.
“Most of these high rollers own massive herds of cattle. They are using the lands productively. Any definition of farming that would exclude them would also exclude every other farmer in the country. Any further tightening on conditions [of Section 89A] will not impact on the very wealthy with their thousands of acres and thousands of cattle and other livestock,” it warned.
“But it will impact on the smaller farmer, the local farmer, the farmer looking to buy a second unit for a second son, or to expand their existing milking block, those who don’t have access to teams of professionals and advisors.”
It said that if it is the Government’s policy to increase land mobility, to deter high rollers from buying up the land, and to protect the family farm, then bringing in Section 89A will act against all of these policies.
It cautioned that Section 89A, in its current guise, would see “more older farmers farming for longer, will open up more family farms for high rollers to buy due to large CAT liabilities, make it more difficult for farmers to acquire land, will reduce the land available on lease and increase the land available on conacre only”, adding that it would “cause CAT liabilities for those farmers most in need of relief and least able to afford a CAT liability without having to sell parts of the farm to fund this liability”.
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