Agriculture regime for VAT
The Dutch agricultural regime exempts farmers, livestock farmers, gardeners and foresters from Dutch VAT. These agrarians do not need to charge VAT or need to have a VAT administration in place. On the other hand, this implies that they cannot deduct the VAT charged to them (input VAT).
Opt for VAT
For most farmers the above mentioned regulation is attractive, but they are free to opt not to make use of this particular regime. A farmer who chooses to be subject to VAT must charge VAT and keep a VAT administration, but is allowed deduct input VAT. Obviously, a farmer wants to opt for VAT registration in case he has input VAT exceeding output VAT. With this the input VAT is not a business cost. Please appreciate that it is most likely that the agricultural regime of VAT will be abolished as per 1 January 2018.
The agriculture exemption in the Dutch Income Tax Law exempts value changes of agricultural land from taxation, but only as far as it regards changes in the value of land under continued agricultural use. For example changes in value due to changes in a destination plan are subject to income tax.
The exemption only applies to changes in value of agricultural land. The subsoil of buildings is also regarded as agricultural land. Please note, that it only regards land that is actually used for agricultural activities. If a farm has other activities such as leasing of land, than the land used for those activities is not covered by the agricultural exemption for income tax.
Abolition of agricultural exemption
The Dutch agricultural exemption has a feverish history and appears to be a fiscal advantage of agrarians as a result of political motives. A Tax Committee for Taxation in the Netherlands advocated in 2010 to abolish this exemption. However, this has not yet happened in 2017. As many (tax) exemptions to the agriculture industry are abolished (such as the agricultural regime for VAT), the question remains whether this exemption will still be in force in 2018.