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Buying Forest as Individual Vs Ltd Company

  • 21-11-2022 12:29am
    #1
    gt12
    Registered Users Posts: 32 ✭ gt12


    Hi,

    Looking to buy a 20+ years old forest ~25 acres size and possibly grow in coming years, but working full-time in non-farming/forestry job. Considering grants would be finished at 20 years, so won't be getting any grants.

    Read lots of information, that talks about Individual forest owner benefits like -

    - no income tax ( though 4% PRSI + 8% USC = total 12% still needs to be paid on crop profits)

    - no CGT on timber gains ( though CGT applies to land value appreciation)

    - 2% Stamp duty of land value (cost of forest wood is excluded when calculating this land value)

    - 5.4% VAT on total Revenues from crop if VAT unregistered forest owner with Revenue

    - anything else?

    So far my understanding for Ltd Company is:

    - 12.5% Corporation Tax for farming at crop profits (ie. income tax for company)

    - CGT: is it similar for Ltd Company as for Individual?

    - 7.5% Stamp Duty: is it on the land value or total value including crop? I guess it should be on land value but good to be sure.

    - 5.4% VAT on total revenues from crop if unregistered farmer at Revenue.ie

    - accounting fees every year for tax filing to maintain company registration? Any estimate how much per year?

    - any other expenses?

    Wondering:

    Ques 1: Is above understanding correct? Else, better asking - if i buy as a Ltd Company what's taxation rates?

    Ques 2. What are the benefits, and dis-advantages over Individual forest owning?

    Just looking to separate the taxation for the job Vs forestry, as well as, for later on selling or passing on to family saves 33% Inheritance taxation and other challenges. Any general advise would be great.

    Post edited by gt12 on
    Tagged:


Comments

  • #2
    accidental forester
    Registered Users Posts: 64 ✭✭ accidental forester


    As you quote from IFAC on the adjacent post, if you're VAT registered, you'll have to charge 23% VAT on timber sales.



  • #3
    gt12
    Registered Users Posts: 32 ✭ gt12


    Hi Accidental forester,

    Thanks for your reply. Just collecting bits of info to see what's better value in long term ;)

    If I go Ltd Company route, would it be better to go with VAT unregistration to get 5.4% vat rate? Sorry if that's not even possible, I am starting to learn.



  • #4
    accidental forester
    Registered Users Posts: 64 ✭✭ accidental forester


    I'm not an accountant (or even a registered forester for that matter) so definitely get professional advice. I don't see where being a limited company will be of benefit in a forestry context. There's a good bit of paperwork and filings involved. My day job is performed as a "trading as" entity, ie. not a limited company. However I am VAT registered due to turnover level. When we bought our plantation (similar to what you describe: a 20+ year plantation), I couldn't buy it in my name as "I" am VAT registered. We bought it in my name and wife's name. Apparently that makes us a separate entity. We didn't want to be in the VAT net for any potential sale of timber or firewood. If your only intention is to eventually clearfell and sell to a mill or contractor, it probably won't matter as they will be VAT registered.



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