Special allowance for agriculture
If you run an agricultural, gardening centre or horticulture business, you may receive a special allowance for agriculture. The special allowance for agriculture reduces the taxable income in your agricultural business.
Does this apply to me?
If your:
- agriculture,
- plant nursery,
- horticulture,
- beekeeping (the production of honey),
- alpaca husbandry and/or
- breeding and rearing of horses up to two years of age when this happens with more than 50 percent self-manufactured animal feed
is run as a business activity for more than six months of the income year, you may be entitled to the special allowance for agriculture.
Income from forestry or reindeer husbandry does not entitle you to the special allowance for agriculture.
Rates and key figures
If the profit from your business at the farm is less than NOK 93,000, the special allowance for agriculture will be the same as the profit. Then the taxable income from agriculture will be NOK 0.
Example
Profit NOK 80,000
- the special allowance for agriculture NOK 80,000
= Taxable income NOK 0
If the profit from your business at the farm is between NOK 93,000 and NOK 361,421, the special allowance for agriculture will be NOK 93,000 plus 38 percent of the profit over NOK 93,000.
Example
Profit NOK 200,000
- the special allowance for agriculture: NOK 93,000
+ NOK 133,660
38% of (200,000 – 93,000)
= Taxable income NOK 66,340
If the profit from your business at the farm is more than NOK 361,421, the special allowance for agriculture will be NOK 195,000.
The upper limit for the special allowance for agriculture is NOK 195,000.
What you need to do
To claim the special allowance for agriculture, you must meet the following conditions:
This means that if you deduct the expenses from the income, you must be left with a profit in order to claim the special allowance for agriculture.
The main rule is that you must have been resident on the property you run a business from for more than six months of the income year.
If there has been a generational change on the farm and the older generation still lives there, it’s enough that you who inherited the farm live less than 20 kilometres from the farm.
The same applies to renting out. If you rent a farm and live close by because the owner still lives on the farm, you meet the conditions if you live less than 20 kilometres from the farm.
You do not need to own the farm. You can claim the special allowance for agriculture if you rent the farm you engage in agriculture on.
The special allowance for agriculture is calculated based on how big your agricultural business profits are, this means all income minus all expenses.
In the basis for the special allowance for agriculture you can also include:
Even if the agricultural business sees a loss, you can claim the special allowance for agriculture if you have income from other activities connected to the farm when the other income leads to an overall profit for the farm.
- the sale of soil, sand, stone and peat
- the collection of berries, cones, moss, kelp or the like
- the use the farm’s machinery, tools or assets in carrying out assignments for others
- income from the renting out of residential properties, agricultural buildings, hunting and fishing rights, milk quotas, grazing rights, rights of way and the like
- the renting out of one to two holiday homes on the farm. The renting out of three or more holiday homes is a separate business activity.
- income from leased plots of land, including when the plots of land are in a forest that is its own business
- income from the production of biofuel or firewood
If you have income from the production of biofuel or firewood, you can choose whether to include this in the basis for the special allowance for agriculture. Biofuel includes, among other things, plant materials, fertiliser, slaugter waste and wood such as firewood, chips, pellets and bark.
You can include income from the production of biofuel in the basis for the special allowance for agriculture even if the production is its own business activity and the turnover is more than NOK 30,000.
If you decide to include this income in the basis for the special allowance for agriculture, you must include 55% of the turnover (excluding value added tax) in the basis.
You make a profit of NOK 200,000 in your agricultural business. You also rent out plots of land. There you make a profit of NOK 150,000.
Profits in your agricultural business (NOK 200,000)
Profits from other activitites (NOK 150,000)
The basis for the special allowance for agriculture (NOK 350,000)
The special allowance for agriculture is NOK 93,000 plus 38% of the profit over NOK 93,000.
NOK 93,000
+ NOK 97,660 (38% of NOK 350,000 – NOK 93,000)
= NOK 190,660
You must not include the income from activities that make up their own business activity. Nor must you include income from the sale of leased plots of land that are in a forest that is its own business.
If you engage in other activities that are not connected to the agricultural business, you can also include the profits from these activities if the turnover is less than NOK 30,000.
If the turnover is NOK 30,000 or more, the income cannot be included. If the activity is considered its own business activity, the profit must not be included.
Only include the profit from this activity in the basis, not the entire turnover.
Example
Per is engaged in agriculture activities and meets the conditions to claim the special allowance for agriculture. In addition to the farm, Per also runs a carpentry business with a turnover of NOK 29,000 a year. His expenses amount to NOK 6,000. The profit will then be:
Turnover NOK 29,000
- Expenses NOK 6,000
= Profit NOK 23,000
Since Per’s turnover from the carpentry business is less than NOK 30,000, he can include the profit of NOK 23,000 in the basis for calculating the special allowance for agriculture.
You can include any sickness benefit, parental benefit, pregnancy allowance and work assessment allowance that replaces income from the agricultural business.
Such benefits must be entered directly into the tax return. The benefits must also be included in the basis for the special allowance for agriculture.
The special allowance for agriculture does not reduce the calculated personal income. This means that the special allowance for agriculture does not reduce the basis for calculation of sickness benefit, parental benefit and other benefits.
Specific information if you
If you use the farm’s machinery, tools or assets in carrying out assignments for others, this is considered part of the farm’s income. It could, for example, be that you use the farm’s tractor and mower to mow someone else’s land.
If more than 40 percent of the property’s total use is in carrying out assignments for others, this will be considered a separate business.
The special allowance for agriculture is connected to an operational entity. One operational entity is entitled to one special allowance for agriculture, even if it’s run by several people.
One operational entity is usually one property where the business is run, for example, a farm. If you own, rent or run multiple properties, these will usually be considered as one operational entity, and the running of the properties will be calculated as one business.
In some cases, a property can be divided up into several operational entities. Then every operational entity can be entitled to their own special allowance for agriculture. The operational entities must be run by different people.
If you run the business together with others and you live on the same operational entity, you’re only entitled to one special allowance for agriculture with one collective upper limit. This applies regardless of whether you run one joint business or one business each. Even if you run the business on separate properties, you’re only entitled to one special allowance for agriculture.
If you live on one operational entity each and run two separate properties, you’re entitled to one special allowance for agriculture each.
Example
The spouses Per and Kari live on a farm where Per is engaged in agricultural activities and Kari keeps bees (produces honey). Since Per and Kari both live on the farm where the business is run, they only receive one special allowance for agriculture.
If Per and Kari live and run their businesses on two different farms or properties, they will be entitled to one special allowance for agriculture each.
If you’re engaged in agricultural activities together with others in a business assessed as a partnership (SDF), your share of the profits, work remuneration and rental income must be included in the basis for the special allowance for agriculture. The condition is that you own and live on the entity that is run by the business.
If you’re engaged in reindeer husbandry and/or slate production in addition to agricultural activities, the upper limit for deductions is NOK 195,000 combined for all the industries.
There are other deductions for fishing and seafarers. If you’re entitled to these, you can receive them in addition to the special allowance for agriculture.
Supporting documents
You do not have to send us any supporting documents or include attachments in the tax return, but you must retain your accounts and any vouchers along with other supporting documents. You must be able to provide such supporting documents if we ask you to do so.