Agricultural activity is carried out on small family farms in most European countries, we therefore consider it a best practice that in many Member States taxation is related to the economic size of the farms.
The distinction and differentiated taxation of agricultural and non-agricultural activities entail the application of several methods and records at the same time, which makes it difficult for the farmer to comply with tax administration. In order to ensure a long-term survival of small farms and family farms, tax rules allow a simplified tax calculation in view of the size of these farms. The system also offers simplified administration for the farmers but excludes tax evasion over a certain size.
Another important issue and good practice at the same time in agricultural taxation is that small farmers may use flat rate tax, based among others on the geographical, environmental, social, and infrastructural and soil characteristics of the farm.
Agricultural activities in addition to basic activities include secondary agricultural and forestry activities, processing, farm catering service, selling of stum, room hire up to 10 beds and cooperation between the various farms and holdings.
Another important issue to note is the fact that the certain processed traditional products (e.g. cheese) are defined as primary products, rather than processed products.