Tax Implications on signing aSolar Contract
IFACAccountants
“We take the headache, stress and hassle out of accounts, finance and tax planning”
By Declan McEvoy Head of Tax
A.I.T.I.-Chartered Tax AdvisorT.E.P.-Trust and Estate Practitioner
IFAC AccountantsIrish Farm Centre
Email: [email protected]: 01 4551036
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Areas to Consider
• Income Tax
• Capital Gains Tax
• Capital Acquisition Tax
• VAT
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Process
Immediate
– Income Tax
– CGT
Longer Term
– Capital Acquisitions Tax
– VAT
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Option to Lease● Separate asset
● Tax Effect is 33% CGT
BUT
If Exercised:
● Treated as a premium
● Part liable to Income tax/part CGT
Not exercised
● CGT – Back to date entered into
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Upfront Payment
● Normally until planning
● Premium at planning
● Merge with each other
● Tax treatments depends on length of lease
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Case Study
Eg. 25 year lease
● 5 K per annum – say for 4 years
● 50k on Grant of planning
CGT - 48% (€33,600)
I.T. - 52% (€36,400)
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Solar – Farm Operating
● Annual lease
● Liable to income tax
● Unless Solar Company farming
● No lease exemption
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Future Issues
● Capital Acquisition Tax
● Business relief – out as land leased
● Agricultural Relief:
● Definition
● Revenue guidance
Tax Health Warning
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Future Issues
● Capital Gains Tax
● 25 year rule
● Owned and farmed for 10 years prior to 1st
● Let out
● Only on lifetime transfer
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VAT
● Developed by tenant
● Tenants responsibility
● Option to tax
● Options – VAT /no VAT on lease
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Summary
● Prior to signing
● On signing
● Revenue Guidance needed
Stability & Experience are the hallmarks of the IFAC Service