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When does a tax exemption become 'state aid'?

Category Technical Articles
AuthorLisa Herd
An article by Julie Butler appears in the March 2006 issue of Tax Adviser. Stallion fees (nomination income) received from stallions standing in Ireland (kept on land in the state) are currently 'tax free' in Ireland. Until 1 January 2004 this income did not even have to be declared on the Irish tax return.
However, this stallion fee income stream does have to be declared on the UK tax return unless there is a 'bridge' between the UK owner and the stream, eg, Irish trusts and companies that reinvest the profits from stallions into other Irish assets.
The Irish bloodstock industry employs about 20,000 people and was worth €180 million in exports last year; it has been 'tax free' for the past 35 years.
The question of tax exemption on stallion fees and whether it amounts to state aid is now being investigated by the European Commission following complaints by Britain and Italy.

Technical Department
020 7235 9381

March 2006 by Julie Butler


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