Several countries of southern EU (Spain, Portugal) and the former Eastern bloc (Poland, Romania, Hungary) have special preferential tax regime for agricultural incomes. According to an article of the journal Agriculture crop and Animal husbandry published by AgroTypos, the use of tax exemptions and tax low rates based on objective criteria for farmers that does not subject them to excessive taxation, essentially supports the primary production. Moreover in some countries there are tax reductions in the form of tax incentives for farmers with small farms and young farmers.
Poland is the country with the most favorable tax system of farmers in the EU. Farmers do not pay tax on their agricultural income, but only the “rural tax” for their agricultural land. In 2015 this tax was 153.52 Polish Zloty/ha (about 3.4 euro/ha).
Romania and Hungary have the lowest tax rate of 16% for all professionals and farmers as well.
Spain has a privileged tax regime for the farmers, who pay reduced VAT, fuel duty and tax for their income. The tax is based on “objective criteria” for farmers with annual gross cash farm income up to 250,000 euros, a limit that includes the 90% of them. In addition, there are low tax rates for young farmers and producers of small farms. Incomes that exceed the limit of 250,000 euros are taxed by the system of revenue and expenditures.
Portugal exempts from the tax the farm income up to 22,600 euros. For incomes between 22,600 and 200,000 euros only the 25% of the sales of agricultural products are taxed and the 10% of rural aid.
Cyprus has a tax-free limit of 19,500 euros for farmers, like for the other professionals. Incomes from 19,501 to 28,000 euros are taxed by 20%, from 28,001 to 36,300 euros by 25%, from 36,301 to 60,000 euros by 30%, and for more than 60,000 euros by 35%. It is mentioned that the income includes the CAP payments.
Germany gives the opportunity to farmers with land up to 200 acres and breeders with 50 animals at most to choose the way of taxation either by bookkeeping system, or by imputation of income. The major producers are compulsorily taxed by bookkeeping system, while the tax-free limit for all is the 7,664 euros. Tax rates ranged between 14% and 45%.
United Kingdom has set as tax-free threshold the 10,000 British pounds (1 euro = 0.76 British pound) for everyone. Incomes over this limit are taxed by rates ranging from 20% to 45%.
Netherlands has set a tax-free limit at 4,600 euros. The tax rates range from 33% to 52%, including rural aid.
Belgium has no tax-free threshold and the taxation is based on the farm land, the geographical areas and other parameters by a rate of 25%, while rural aid are taxed at 12.5 to 16.5%.
Sweden taxes the profits of farmers income by 28.97%, while the tax rate is reduced for young farmers to 14.89% and for older farmers to 10.21%.