Sow and rearing sow for business asset tax

For twenty-five years now, the agricultural sector and the tax authorities have successfully established agricultural standards. For pig farmers, this means that the cost price reflects the value of the animals. In a tax sense, sows and breeding sows are business assets. 

The agricultural standards are nationally binding for the entire tax authorities. Under certain conditions, entrepreneurs have the possibility under formal law to deviate if their business operations give cause to do so. To this end, the entrepreneur or his accountant must be able to submit a well-substantiated calculation showing that the standard amounts cannot apply to his company. In addition, the agricultural entrepreneur must indicate in his declaration that he has deviated from the national agricultural standards when preparing the annual accounts. The underlying reason for this possibility of derogation is that the agricultural business representatives of the individual agricultural entrepreneur have not been given the mandate to make such agreements.

Principles for the calculation of the standards for pigs
Sows and sows for rearing are 'business assets' for tax purposes. An integral cost price is calculated on the balance sheet date for the valuation of sows and rearing sows (collectively 'breeding pigs'). When determining the value of breeding pigs, a distinction is made between home-bred and purchased pigs. The base value of breeding pigs is increased by the rearing costs per day.

The basic value of the pigs is based on one of the following values: The value of a piglet reared at home, the purchase price of a piglet purchased and the initial value of the pig on the balance sheet date if the pig was already present on the farm on that day

Specific sows and breeding sows
The total rearing costs from piglet to sow consist of: feed costs, housing costs as well as 'other costs', such as energy costs, insemination costs and costs for bedding and manure removal.

Table 1 shows the standard amounts for the rearing costs of sows and rearing sows.

1 The costs of the rearing piglet also include costs for selection, studbook and the like. 

When valuing sows and breeding sows, use can be made of the individual method or the average value system.

Individual method
With the individual method, the value in the rearing phase from piglet to sow is determined by adding an amount of rearing costs per day to the base value of the piglets reared by the piglets or the purchase price of the piglets purchased. This takes place from the birth or purchase of the piglets until the moment of the sow's first parturition. Per phase (breeding piglet, rearing sow and pregnant sow) the rearing costs are added until the piglet is a fully grown, pregnant sow. After the first litter, the value of the sow is depreciated in equal parts up to the residual value. The residual value is the value of a slaughter sow. A maximum of 20 percent of the value of the sow may be depreciated each year until the residual value is reached. Despite the fact that the lifespan of a sow is usually shorter than five years, it is not allowed by law to depreciate faster.

Mean Value System
In the average value system, the average value of the entire herd of breeding sows is determined. This is done per animal category. 
As soon as an animal is no longer in possession, for example due to sale or loss, it is written off against the average book value of the category to which the animal belonged at the beginning of the year.
If breeding pigs are bought or reared, the book value of the breeding pigs is increased at the beginning of the year by the purchase prices and rearing standards of the animals added to the pig herd. The rearing amounts of the animals that have been raised by own rearing and that have been transferred to a different age group are also added to the pig herd.
If it can be demonstrated that the breeding pigs were purchased in the course of the year and disposed of in the same year, those pigs need not be included in the calculation of the average value. 

Piglets and finishers
Piglets and fattening pigs are valued as commercial or beef cattle. In the valuation, 'the basic value' of piglets and fattening pigs is increased by the rearing costs per week. 

Specific piglets
In the case of a piglet reared at home, an entrepreneur increases the birth value with the amounts for rearing costs until a piglet weighs about 25 kg. On average, a piglet is 10 weeks old. For purchased piglets younger than 10 weeks (weanling piglets), the purchase price is increased by the rearing costs for piglets until the age of 10 weeks is reached. After the piglets have been selected as rearing piglets for the rearing of sows, they are valued according to the standards 'Normal amounts for sows and rearing sows', because selection and studbook costs are then added.

Table 2: Standard amounts for piglets

1 'n' is the purchase price of the purchased piglet.

Specific finishers
When piglets are kept until they are ready for slaughter, the cost price depends on the age in weeks of the finisher. Table 2 shows the standard amounts that must be used to determine the cost price of the piglets reared at home. 

In the event that the piglets have been purchased, the actual purchase price must be used and, depending on the age, the purchase price must be increased by the standard amounts from table 2.

In both cases, the value is then increased by a standard amount. What standard amount that is depends on the method of valuation; including or excluding feed costs. The standard amounts for rearing costs can be found in table 3a and 3b:

When the standard amounts are calculated excluding feed costs, the result must be increased by the actual feed costs.

Once a method has been chosen, this method must also be used in the following years (the permanent line of conduct).

From the glossary: 

Base value
Value of an animal at the beginning of the rearing period, consisting of the costs spent on the animal, excluding rearing costs.

good sow
A sow that is not pregnant.

Torque
A group of animals housed together in 1 unit. This usually concerns poultry or pigs.

rearing sow
A sow that is kept for propagation (breeding) from 25 kg until the first mating. A breeding sow is used for breeding after 260 days on average.

weaning piglet
A young piglet from about 6 weeks that needs to be further raised to a full-fledged piglet of 10 weeks (about 25 kg).

Sow
A pig of the female sex that has been mated or inseminated at least once. This also includes:
− gust sows
− mated sows
− sows with piglets
− sows whose piglets are weaned

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