The case is about the VAT and fiscal treatment of an allowance received in connection with cultivation restrictions on agricultural land, close to water boreholes.
The questioner intends to enter into voluntary agreements with two independent waterworks regarding the ban on the use of pesticides etc. on part of the Respondent’s agricultural property. The areas are designated in a municipality’s action plan for groundwater protection. However, minor technical adjustments/extensions have been made to the – predominantly round – areas of the action plan, to more angular and thus more functional areas.
The Tax Council confirms that the Questioner’s profit regarding the compensation for restrictions on availability will be tax-free according to the rules in section 11, subsection 1 of the Property Profits Taxation Act. 1.
The Tax Council also confirms that the compensation is not subject to VAT.
Source: skat.dk
