The Taxation of Agriculture in the European Union Countries

Kinga Gruziel1, Małgorzata Raczkowska2
1, 2 Warsaw University of Life Sciences – SGGW, Poland
Gruziel, Kinga; ORCID: 0000-0003-2429-3795 (Warsaw University of Life Sciences – SGGW, Poland)
Raczkowska, Małgorzata; ORCID: 0000-0002-8540-8958 (Warsaw University of Life Sciences – SGGW, Poland)
The Taxation of Agriculture in the European Union Countries
Zeszyty Naukowe SGGW w Warszawie - Problemy Rolnictwa Światowego, 2018, vol.18(33), nr 4, s. 162-174

Słowa kluczowe

tax taxation of agriculture agricultural tax

Key words

tax taxation of agriculture agricultural tax

JEL Classification

E62 H24 Q1

Streszczenie

The paper sets out the key principles for taxation of agriculture in selected European Union countries. The theoretical foundations of tax systems in the context of their functions and features specified as desirable in the literature are discussed. EU agricultural taxation systems are presented in reference to optimisation and tax competitiveness. Some shared features of these agricultural taxation systems were pointed out and their division in two basic models (the British model and the continental model), which was presented taking as example the countries in which these models operate. Taxation of income derived from agricultural business activity is a natural direction of changes in tax systems. The tax policy implemented in the European Union countries in relation to agriculture make use of the principle of tax justice to the highest possible extent. The diversity of the tax rules and structures applied in the EU makes it possible to tax agricultural income without limiting the development potential of agricultural enterprises (farms), and often stimulates them. The form of individual tax systems results from numerous economic, social and political circumstances. Special tax treatment of agriculture is expressed through tax construction elements, e.g. right to deduct the value of generated loss or investment expenditure from taxable income.

Abstract

The paper sets out the key principles for taxation of agriculture in selected European Union countries. The theoretical foundations of tax systems in the context of their functions and features specified as desirable in the literature are discussed. EU agricultural taxation systems are presented in reference to optimisation and tax competitiveness. Some shared features of these agricultural taxation systems were pointed out and their division in two basic models (the British model and the continental model), which was presented taking as example the countries in which these models operate. Taxation of income derived from agricultural business activity is a natural direction of changes in tax systems. The tax policy implemented in the European Union countries in relation to agriculture make use of the principle of tax justice to the highest possible extent. The diversity of the tax rules and structures applied in the EU makes it possible to tax agricultural income without limiting the development potential of agricultural enterprises (farms), and often stimulates them. The form of individual tax systems results from numerous economic, social and political circumstances. Special tax treatment of agriculture is expressed through tax construction elements, e.g. right to deduct the value of generated loss or investment expenditure from taxable income.