Tax incentives

  • NO INCOME TAX
  • NO CAPITAL GAINS TAX
  • NO INHERITANCE TAX AFTER TWO YEARS

UK investors will receive several tax incentives should they invest in German plantation forestry. EQ chartered accounts from Scotland has made a report, which we will send to you upon request.

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Income Tax & Corporation Tax

  • No income or corporation tax on the occupation of, or timber income from, commercial woodlands.
  • Profits from the sales of timber are tax-free, rents and other revenue receipts from woodlands are liable to income tax.
  • No relief from income tax is given for expenditure incurred in commercial woodlands.

Capital Gains Tax (CGT)

  • Special provision is made for commercial woodlands under the CGT legislation, for instance:
  • CGT is not payable on the gain in value of standing timber, only the processed timber and the increase in value of the underlying land is assessable.
  • Rollover relief is available when qualifying business assets are replaced, but this relief only applies to the land and capital works.
  • Non-commercial woodlands are subject to normal CGT regulations.

Inheritance Tax (IHT)

  • Commercial woodlands currently attract 100% business property relief provided the transferor has owned the “relevant business property” for a minimum of two years immediately before the transfer.

What defines “Commercial Woodlands”?
There is no definition of commercial woodlands. They are best described as woodlands that are “managed on a commercial basis with a view to the realisation of profits.” There should be evident intent to make profits – income or capital – and the usual attributes of a commercial business such as professional management, separate bank account, VAT registration, accounts, etc.