Stallion stud fees worth up to €52m annually

Stallion stud fees, which have been tax-free for almost 40 years, are worth €51.8 million annually, according to returns received by the Revenue Commissioners.

Minister for Finance Brian Cowen said the fees averaged €285,000 for every stud farm based on the 185 income tax returns the Revenue received in 2005, the latest year for which figures are available.

Department of Finance figures showed that the gross cost to the Exchequer of the tax break during 2004 was €10.7 million.

Stud fees, paid when a stallion successfully impregnates a mare, have been tax-free since 1969, when then minister for finance the late Charles Haughey introduced the incentive. They will be subject to tax from July 31st next year.

Some 13 companies reported stud fees of more than €1 million for 2005, but Mr Cowen declined to give the figure for the highest income because of the "small number of returns with amounts exceeding that level". He said the Revenue had an "obligation to observe confidentiality in relation to the taxation affairs of individual tax payers".

Labour finance spokeswoman Joan Burton, a persistent critic of the tax relief on stud fees, said: "I don't see any reason why people should not be identified if they are getting significant tax breaks. There should be some public record."

The Revenue should publish on a regular basis, detailed information on what tax relief schemes cost and who benefited, Ms Burton added.

"After all, every GAA club and school which receives a grant is named and if taxpayers are funding tax relief schemes, they should know who is benefiting from their tax."

The Labour spokeswoman described the 2005 figures as the "first comprehensive data that's become available from the Revenue Commissioners about stud farms. I think what's surprising about the figures is that 13 stud farms had income in excess of €1 million."

She could not understand all the claims that "stud farms couldn't and absolutely shouldn't pay tax", when the method of taxation proposed was "asking stud farms to pay the company tax rate of 12.5 per cent". The figures "show that some of the bigger stud farms can afford and should be taxed".

Last year the EU ordered the Government to end the tax break for profits earned on horse and greyhound stud fees.

Under new taxation provisions, stallion owners will be allowed to write off either the cost or the value, whichever is relevant, of their horses over its first four years at stud. Earnings after this point will be taxed, at 12.5 per cent if the horse is owned by a company, or at the personal rate if owned by an individual or individuals.