Ireland’s breeding industry is set for a major upheaval as the widely
anticipated abolition of the renowned stallion exemption was announced on
Wednesday. In his Budget speech, Finance Minister Brian Cowen revealed that all
income from stallions would lose the tax-free status that had been unchallenged
for 36 years, beginning July 31, 2008. Despite its lack of popularity among the
country’s bloodstock operations, the move has appeared inevitable since the
European Commission cast derision on the current status in January, declaring it
an illegal, anti-competitive state aid.
Irish Thoroughbred Breeders Association Chairman Dermot Cantillon spoke out
about the changes.
“We are disappointed with the decision to abolish the stallion tax exemption,
which has been the cornerstone of our industry and has encouraged significant
investment in stallions and the Irish breeding industry over three decades,”
Cantillon said. “This has resulted in a thriving indigenous industry which
employs over 16,500 people. Without the best stallions retiring to stud in
Ireland, our world-class industry would go into a serious decline and this would
have major consequences for horse breeders, the sport of racing and rural-based
employment.
“Before the tax exemption was introduced in 1969, the industry in this
country was second rate and we have only to look at what happened in France when
their stallion tax situation was interfered (with) to see the dangers,” he
added.
Irish racing’s ruling body Horse Racing Ireland also expressed concern.
“We are disappointed that the stallion tax exemption is to be abolished,
although the decision was somewhat inevitable because it was EC driven,” Chief
Executive Brian Kavanagh said. “We have always pointed out the value of the
bloodstock industry to the Irish economy and we have said many times that there
is no crock of gold involved.”
Kavanagh is hopeful that Cowen’s department will provide a new taxation
framework to soften the blow.
“We will just have to wait and see what the transition arrangements mentioned
in the Minister’s speech will be,” he added. “It would have been devastating had
it been decided to abolish the exemption immediately and, while we are
disappointed at the news, we will await the outcome of discussions between the
department and the EC.”