Registered Farm Partnerships
Registered Farm Partnership (RFP) are a legal arrangement where two or more individuals operate as a single business, sharing profits, decision-making, and responsibilities.
This model is often used as the first step in succession planning, bringing the next generation into the farming business at an earlier stage and officially recognising their role in the farming operation. They can be a powerful tool to blend experience with energy—combining an older farmer’s knowledge with a younger partner’s ambition. Partnerships are also used between non-family members, bringing together two farming operations where resources can be pooled, efficiencies of scale can be maximised and labour and management tasks can be shared between the partners.
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Farm partnerships were originally first established in Ireland in 2002 as “Milk Production Partnerships”. At that stage milk quotas were still in existence and the primary purpose of the milk partnership was to address issues around farm scale, fragmentation and labour. Teagasc oversaw the recording and management of the partnership register up until 2015 when the partnership model was then opened up to all sectors and the registration process was subsequently managed by the Department of Agriculture.
The formation of the partnership is based on the legal agreement that the parties sign up to. This legal document outlines what assets each individual is bringing to the partnership, there is no requirement to transfer any of the assets as part of the agreement and this provides security to the asset owner if and when the partnership is dissolved. The profits that are generated are then divided in line with the profit sharing ratio that is outlined in the partnership agreement.
The partnership is registered with the DAFM Partnership office, and once the partnership number is issued they can to apply for enhanced benefits. The Targeted Agricultural Modernisation Scheme (TAMS) ceiling for RFP’s is capped at €160,000, compared to the €90,000 ceiling for sole traders. Where a partnership includes a young trained farmer, the first €90,000 of this can be claimed at 60% and the remaining €70,000 at 40% (or 60% if there is also an eligible woman in the partnership). In addition to the increased TAMS funding, partnerships that include a young trained farmer can also avail of the Complementary Income Support for Young Farmers and the National Reserve, where eligible. These schemes often provide vital capital funding to develop and enhance the farm, ensuring its viability into the future.
Registered Partnerships with DAFM
There are currently over 4,800 partnerships registered with the DAFM’s Partnerships office. Many of these are family partnerships but there are also a number that involve non family members. As part of the application process, it is necessary to complete a partnership agreement and an on-farm agreement. The partnership agreement outlines what each party is bringing to the partnership, what land is to be farmed and how the profits are to be divided. Where a young farmer is part of the agreement, they must be entitled to a minimum of a 20% share of the profits. The on-farm agreement outlines how the arrangement will work on a day-to-day basis, what duties will be assigned to each partner, what roles each will undertake and what work schedules will be in place. The on-farm agreement forces the parties to sit down and discuss how the agreement will work over time so each partner has a clear understanding of their role and requirements within the partnership structure. It is vitally important that there are open and honest discussions from the outset if the partnership is to last the test of time. Each party will have their strengths and weaknesses and ideally the partnership model should make the best use of each individual’s strengths within the agreement.
Where capital investment is planned, the agreement should outline how this will be funded and if the partnership was to be dissolved, what the financial implications are for the capital projects in place.
Families that receive a partnership number, and that partnership contains a young trained farmer, can apply for a collaborative farming grant that provides 50% funding up to a maximum spend of €3,000 (max grant of €1,500) to help cover the financial outlay for professional fees associated with drawing up the partnership agreement. Details on this can be found here.
With a focus on addressing issues around the age structure of farmers and to encourage the earlier transfer of agricultural assets to the next generation, the succession farm partnership model was launched in 2017. As part of the agreement, the asset owner (generally parent/aunt/uncle) must commit to transfer a minimum of 80% of the Agricultural assets to the successor between the end of year 3 and the end of year 10 of the succession plan. The time and details of the transfer are outlined in the succession agreement. Families that apply for a succession partnership can avail of €5,000 tax relief per year for a maximum of five years, up until the year prior to the young farmer turning 40. This tax relief is split in line with the profit sharing ratio of the partnership agreement. In the case of a succession farm partnership, the agreement must include natural people, therefore companies are excluded.
Succession Farm Partnerships
There are currently 162 active succession farm partnerships registered. It is not permitted to transfer the assets for the first three years of the succession partnership agreement, and as a result the age of the successor has implications for stamp duty relief. Unless the successor is under 32 years of age at the commencement of the succession partnership, they would no longer be eligible for the 0% stamp duty relief for young trained farmers and would instead have to consider the 1% stamp duty associated with consanguinity relief.
A Registered Farm Partnership must operate to certain conditions as set out in SI 247 of 2015 and the associated requirements for registering farm partnerships.
The Farm Partnership Register is managed and maintained by the Department of Agriculture, Food and the Marine.
Address:
Registered Farm Partnership Unit (3C)
Agriculture House
Kildare Street
Dublin 2
Email: farmpartnerships@agriculture.gov.ie
Phone: 01 6072000
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