Right after the first part of the special section on Professional agricultural entrepreneurs (I.A.P.), here comes the second one: how to obtain the qualification and what are the fiscal and financial benefits.
To become a qualified I.A.P. and use the fiscal supports it is mandatory to apply to the Region in charge.
The social security service (INPS = Istituto Nazionale Previdenza Sociale) will check on the registration to the social security management which is another essential criterion to access the fiscal benefit (but not essential to become a qualified I.A.P.)
Here following are the fiscal and financial advantages that I.A.P.s can benefit from.
SMALL FARMING BUSINESS
I.A.P.s can buy agricultural lands and pay 1% of the Land Register fee and a fixed amount of Registration charge and mortgage registration fee.
Moreover, the deed is stamp-duties free and the Notary fee is only half of the usual fee. The same buyer, however, has to commit to directly cultivate the purchased land for 5 years at least: the sale of the lands or the interruption of the cultivation before the 5 years implies the decay of the benefits and the obligation to return the main fees.
Nevertheless, the Italian Tax Office has detected 2 cases in which the decays don’t take place because the aim of the rule, which is the support of the creation and development of the farmer, does not desist:
a) if the purchased land is rented to an agricultural business created by the same I.A.P, his/her spouse and up to third-degree family relatives;
b) if the purchased land becomes an asset of an agricultural business in limited partnership of which the I.A.P. is the managing partner and the other partners are his/her spouse and one of his/her child.
MUNICIPAL TAX – OWNERSHIP TAX (IMU)
I.A.P.s are exonerated from the payment of the ownership tax on the land they own and run, regardless of their location.
It is necessary to remind that the lands owned and run by I.A.P.s (or by Direct Farmers) registered at the agricultural social security management, are to be considered not buildable. The agricultural- forestry-pastoral use persists on such lands, through the activities aimed to cultivate the land, to the silviculture, mushrooms-culture and animal farming.
In this case, the land, even though registered as buildable, is considered as agricultural and, therefore, it is subjected to the dispositions envisaged for the I.M.U. for the agricultural land, hence, the exemption. The benefit applies also to lands owned by several people but run by a co-owner (even if only one) who is in possession of the I.A.P. requirements (or those for Direct Farmer). In this case, the land is considered agricultural for its whole surface; the co-owners in possession of the title qualification of a direct farmer or I.A.P. can benefit from the exemption, whilst the other co-owners will pay I.M.U. according to the ordinary rules, each one for their own shares.
PRE-EMPTION RIGHT/FIRST REFUSAL RIGHT
I.A.P.s benefit from the preemption right or right of first refusal in relation to the purchase of neighboring lands, with the condition that the land for which they intend to exercise the right will be free of any direct farming sharecroppers, farmers, renters, co-participants or leaseholders.
The preemption right is a right that confers to its titleholder a position of preferences towards other subjects, with the same contract conditions, and to the purposes of the stipulation of a deed: benefitting from this right means “to have priority” in the purchase of neighboring lands towards those subjects who don’t.
In addition, the preemption right is subject to a series of obligations, among which the one to run the land for two years at least.
It has to be noted that the benefits of the preemption right are only envisaged for the owned neighboring lands while it has no power for those lands that I.A.P.s cultivate as renters, differently from the people with the qualification of Direct Farmer.
For the three-year period 2017-2019, the I.A.P.s (as well as the Direct Farmers) who are registered ant the social security management does not pay I.R.P.E.F. (taxes on individual income) on the incomes of the land they own and run. The benefit concerns both the agricultural income and the Land Registry income if the land is owned and run by the owner while it concerns only the agricultural income for those who only run rented land.
As explained by the Italian Tax Office, the exemption applies also to the partners of ordinary partnerships that own the foretold qualifications and comply with the agricultural social security.
Partners of unlimited partnerships or limited partnerships who have exercised their option for Land Registry taxation (article 1, comma 1093, law no. 296 of 2006) are excluded, because the income, although determined by the Land Registry outcomes, still keeps having a nature of corporate income.
The same applies to the limited liability companies (even those with I.A.P. qualification) because the rule only refers to the income taxation of the natural persons (I.R.P.E.F.), not to the income taxation of legal persons (I.R.E.S.).
Finally, the I.A.P.s also have other benefits, such as access to the Rural Development Plans for the payment of the infrastructure costs, social security deductions and also in case of expropriation.
Do you need more information about it? So, call at our head office: our professionals will answer all your questions.