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Concepts and definitions

Agricultural income

Agricultural income is the sum of earned income and capital income from agriculture plus shares in business partnerships' earned income and capital income from agriculture.

Deductible agricultural expenses

All expenses incurred in acquiring or maintaining agricultural income are deductible, inter alia:

• cash wages paid to those who work on the farm;
• expenses for acquisition of seeds, fertilizers, soil improvement and plant, protection compounds, fodder, fuels and lubricants as well as electrical power for use on the farm;
• expenses for acquisition of livestock for use on the farm;
• expenses for acquisition and renovation of buildings and constructions on the farm, machines, tools and appliances used on the farm, as well as for pipe draining, bridges, dams and similar equipment;
• expenses for livestock inspections, veterinary medicine services, soil fertility analyses, etc.;
• insurance premiums paid for buildings and other agricultural assets on the farm;
• expenses for repair and maintenance of buildings and construction on the farm, as well as machines, tools, appliances, ditches, bridges, fences, roads, etc. used on the farm;
• expenses for lighting and heating, etc. in buildings on the farm;
• the stumpage value of timber from the farm's own forest for use on the farm for purposes other than construction and repair of buildings and constructions used in farm production;
• rents and other compensations for agricultural land, buildings, machines, tools and appliances as well as other production equipment;
• the part not written off in taxation of the acquisition expense for property transferred by the taxpayer to agriculture from another income source, or such higher amount which has been deemed to be the taxable sales price in that income source;
• real estate tax, to the extent that it pertains to property used on the farm.

Farm

The Farm Register defines a farm as an "active holding" with agricultural production and at least one hectare of arable land in use. A holding with less than one hectare of arable land in use is considered to be a farm for statistical purposes if its economic size is at least 1 European Size Unit (ESU), i.e. 1200 euros.

In agricultural income and tax statistics a farm is defined as a holding which has at least 2 hectares of arable land under cultivation and is held by an individual.

In agricultural business and income statistics a farm is defined as a holding which has at least 2 hectares of cultivated farmland and is taxed under the Farm Income Tax Act.

Farming

Farming comprises all agricultural and forestry activities of a farm. Agriculture includes agriculture proper as well as special farming and other activities associated with agriculture or forestry that are not deemed to constitute a separate business.

Net agricultural income

Net agricultural income is the income received in money or money's worth in the tax year, after deduction of expenses incurred in acquiring or maintaining the income.

Net income from agriculture

Net income from agriculture equals net agricultural income minus index and exchange rate losses and interest on debts pertaining to agriculture.

The net income from agriculture of a person engaging in agriculture is the total net income of agriculture from each of that person's farms.

Taxable agricultural income

Taxable agricultural income includes inter alia:

• sales prices and other compensation for agricultural and horticultural produce as well as livestock;
• sales prices for machines and buildings;
• farm subsidies and compensations;
• sales price and other compensations as well as insurance and other indemnities for gravel, clay, earth, peat, reindeer moss and other substances that have been removed from the farm;
• sales price for products from a production facility on the farm as well as compensations from another activity in connection with agriculture or forestry, unless the production facility or activity is deemed to be a separate business;
• sales price for products obtained through hunting or fishing;
• rents and other compensations for the use of machines, tools and appliances, horses and other production equipment, as well as such wages and other work-related compensations for work performed by the taxpayer or by workers hired for agricultural or forestry work that are paid in connection with compensations for the use of production equipment;
• land rent, rents and other similar compensations received for the farm or part of it or for buildings situated on the farm;
• sales prices for agricultural equipment acquired by purchase;
• the probable sales price at the time of sales for such agricultural and horticultural produce, gravel, clay, earth, peat, reindeer moss and other substances that have been removed from the farm and transferred to another income source of the taxpayer.