10 tips for anyone thinking of trading BISS entitlements

Michael Brady.

Agricultural Consultant and managing director at Brady Group: Agricultural Consultants & Land Agents.

The Lodge, Lee Road, Cork. T23 KW88

1st published in The Farming Independent: 09/05/2023

The trading of BISS entitlements 2023 is now well underway with the 29th of May deadline looming.

 If you are buying, selling, leasing in or leasing out entitlements in the next few weeks here 10 tips to consider:

  1. Buying v Leasing

There is no clawback on the sale of BISS entitlements in 2023 & 2024. This has caused those with surplus entitlements to consider selling their entitlements instead of continuing to lease them out this year. It also makes sense to buy entitlements instead of leasing them in, if you have ‘naked land’ as they are guaranteed for the next 5 years between 2023-2027. It the same concept as renting a house versus buying a house. 

  • Prices

In my experience to date, selling/buying entitlements are making are around x 2.5 time their value and leasing entitlements are making upto 60% of their 2023 value.

  • Base value for selling/buying

When buying/selling entitlements at 2.5 times their base value, the base value should be the average BISS Unit value for the 5 years between 2023-2007. This removes any confusion about paying different prices for high or low value entitlements. The reality is that high value entitlements are going to fall and low value ones are rising over the next 4 years(convergence). Year 4’s value will be the same as year 5.

  • Organise finance early

If you decide to buy entitlements get your finance organised early. Buying entitlements is a bigger sum to pay than if you have been traditionally leasing in every year. Licensed agents will require money upfront to hold in their client account until the trade is processed by the Department of Agriculture Food and Marine. 

Most agents charge in the region of 5%+vat @23% for buying and selling. Minimum fees apply (€150+vat per transaction) as small number of entitlements generate fees that are too small to make the transaction worthwhile for agents. Remember a licensed trustworthy agent is a value for money agent.

  • The 2 year rule

There has always been a 2 year ‘use it or lose it’ rule with entitlements. However, as this is a new regime 2023 is year 1 even if you did not use them last year.

  • Single or part of an entitlement

All advisors/consultants and agents are ‘flat to the mat’ busy until the 29th of May deadline. If you have one or part of an entitlements don’t expect the agent to be negotiating for you, there is not enough time nor reward. 

  • BISS amendments

While the closing date for the receipt of Transfer of Entitlements applications is 29 May 2023, if a change made to a BISS online application leads to a farmer having insufficient land to use all of their entitlements, they will have the opportunity to submit a Transfer of Entitlements application up until midnight on 14 June 2023. This is only available to farmers who can show that they have made a change to their BISS application by 14 June 2023 and that change has directly led to the need to transfer entitlements. This is a new facility in 2023.

  • Transfer Confirmation Signature Form

The Department of Agriculture Food and Marine (DAFM) are insisting that the Transfer Confirmation Signature Forms must be witnessed by a solicitor or peace commissioner, not agents this year.

  1. Tax

The tax treatment of income received from entitlements must be considered when planning to sell or lease entitlements. There is Capital Gains Tax (CGT) on selling which may be a 10% or 33% depending on your situation. There will be income tax on leasing unless it’s part of a long term lease with land. In my experience every farmer’s individual situation is different, therefore it is vital to go through your options with an experienced consultant/advisor before any decisions are made in respect of BISS entitlements.  

Many advisors/consultants have decided not to partake in the trading of entitlements this year due to time pressure with BISS applications. Therefore, don’t let your decision on trading BISS entitlements to the last minute as you may not get your entitlements traded. Select an experienced agent or Electronic Transfer Facilitator (ETF), transfer your entitlements to their ETF number and trust them to do the business for you.