Tax incentives and support for sustainable agriculture

Public support for sustainable agriculture in Spain is channelled mainly through direct aid (the Common Agricultural Policy eco-schemes and regional grants) and, to a lesser extent, through general-purpose tax incentives (free depreciation for renewables, the partial refund of the agricultural diesel tax and local reliefs). It is worth being precise about which of these actually exist, because a great deal of inaccurate information circulates about supposed farm-specific deductions.

This article separates what is real from what is not, and explains how to make the most of each form of support in 2026.

Agriculture's role in the green transition

Intensive farming can degrade soil, pollute aquifers and emit greenhouse gases. Sustainable agriculture responds with crop rotation, the rational use of water, fewer chemical inputs and the use of renewable energy in irrigation and machinery. In doing so it contributes to the decarbonisation of the primary sector.

Direct aid: the main route of support

CAP eco-schemes (Spanish CAP Strategic Plan 2023-2027)

The most important instrument is the eco-schemes of the CAP Strategic Plan, managed by the FEGA. These are voluntary, annual per-hectare payments in exchange for practices that benefit the climate and biodiversity. Their key features:

• There are nine eco-schemes adapted to the diversity of Spanish farming (extensive grazing, sustainable mowing, crop rotation, conservation agriculture, vegetation cover, biodiversity areas).
• Each hectare can receive payment for only one eco-scheme, even if more than one practice is carried out.
• You must be an active farmer and have the holding entered in the official registers.
• A substantial share of CAP direct aid is allocated to these environmental commitments.

Regional calls for applications

The autonomous communities run support schemes for conversion to organic farming, the installation of renewables on holdings, the modernisation of irrigation and training. We develop this in subsidies for sustainable businesses. Each call sets its own requirements and deadlines.

Tax incentives that do apply to farming

Refund of the agricultural diesel tax

Farmers and livestock keepers can apply to the Spanish tax agency for a partial refund of the excise duty on hydrocarbons on diesel used in tractors and agricultural machinery. It is a well-established benefit, processed annually; the amount per litre is set by the rules for each campaign. It is not strictly a green incentive, but it is a real tax relief for agricultural activity.

Free depreciation for renewables

Holdings taxed under corporate income tax, or under personal income tax on a direct-assessment basis, can use the free depreciation of renewable self-consumption installations (17th additional provision of Law 27/2014, extended to 2026), useful for solar panels powering irrigation systems or buildings.

Local reliefs and taxes

• Vehicle tax (IVTM): many town councils exempt or grant relief to tractors and agricultural machinery, and may apply reliefs of up to 75% to the holding's electric vehicles.
• Rural property tax (IBI): some municipalities provide reliefs, usually linked to cooperatives or to circumstances set out in the Local Finance Act, rather than generally for being organic.

What is worth clarifying (common myths)

• There is no specific national personal income tax deduction for organic conversion of a holding. Support for that transition comes through CAP aid and calls for applications, not through a dedicated tax deduction.
• There is no general environmental deduction in corporate income tax: it was repealed in 2015. Agricultural companies use free depreciation and, where applicable, the R&D&i deduction.
• The business activity tax (IAE) does not grant relief for organic farming, simply because dependent agricultural and livestock activities are not subject to the IAE (article 78 of the consolidated Local Finance Act). You cannot grant relief on a tax that is not paid.

How to make the most of the support

1. Learn about the CAP: review which eco-schemes fit your holding and their requirements at the FEGA and your autonomous community.
2. Apply for the diesel refund each campaign and review open regional calls.
3. Plan your investments in renewables or efficient irrigation to take advantage of free depreciation and grants.
4. Keep your documentation: invoices, CAP declarations and certificates are the basis of any aid or refund.

Frequently asked questions

What helps a sustainable holding most financially?

In most cases, the CAP eco-schemes and regional calls, by their volume, plus the agricultural diesel refund. Tax incentives are a complement.

Can I combine CAP aid with tax incentives?

Yes, they are compatible, but it is worth reviewing how each form of aid counts for personal or corporate income tax purposes and for the basis of investments.

If you want to quantify the environmental impact of your holding and demonstrate it to buyers and authorities, with Manglai you can measure your carbon footprint using real data.