The number of part-time drystock farmers opting to incorporate their farm business is on the rise as farmers look for more ways to reduce income tax and build wealth, commercial manager at ifac Martin Clarke told Teagasc’s national sheep conference in Athlone on Tuesday.

Both tax bills and loan repayments can often be made more efficiently by switching a farm from a sole trader structure to one incorporated as a private limited company, Clarke said.

He stated that while going down the route of a private limited company is generally “complex to set up”, the structure is generally “very straight forward” once up and running.

“What are the benefits? No question about it, the tax at 12.5% is the headline attraction,” Clarke explained.

Income tax

“Typically, the rates range between 52% to 55%, so the difference of doing your business in a corporate structure is very significant, depending on income and profits,” he said when referencing farm income tax where there is a substantial off-farm income.

“Some would say ‘that is only for big farmers and people who have big profits’ but that is not necessarily so. We have probably seen a shift towards people with incomes of €20-, €30-, €40,000 using companies as well for tax bills.”

The switch is proving particularly attractive for those seeking to invest, such as by purchasing land, and who have low drawings on the farm due to an off-farm income.

Farmers do not need to transfer land into the company when incorporating, Clarke added in response to a question from the floor.


“We would always recommend then that you license the land into the company and that you retain the land in your own name. The only time, generally speaking, where we would have the company owning land is where the company buys it, because it is efficient the from a repayment capacity.”

Teagasc director Frank O’Mara opened the conference by recognising that 2023 had been a tough year for sheep farmers.

O’Mara cited difficult weather, falling lamb prices and relatively high input costs as reasons for the sector’s challenges last year.

Teagasc’s economists are “cautiously optimistic” for an increase in farm margins over 2024 as input costs as expected to “decrease a bit further” but still remain higher than the long-term average.