For Oral Answer on : 23/11/2023
Question Number(s): 149 Question Reference(s): 51237/23
Asked by: David Stanton T.D.
To ask the Minister for Finance to explain the rationale by the Revenue Commissioners for considering computerised calf feeders which are either bolted to a concrete floor or set in concrete to be “movable goods” and therefore not eligible for a VAT reclaim which is available to non-VAT-registered farmers; when this policy change was decided; if he will direct that this policy revert to that which was previously in place where VAT reclaim was permitted; and if he will make a statement on the matter.
I am advised by Revenue that the VAT treatment of goods and services is subject to EU VAT law, with which Irish VAT law must comply. In accordance with the EU VAT Directive, farmers can elect whether or not to register for VAT in respect of their farming business.
Farmers who register for VAT have an entitlement to reclaim VAT on costs incurred in relation to their agricultural business. A farmer who has elected to register for VAT and charges VAT on their supplies can claim a deduction for VAT incurred on costs that are used for the purposes of their taxable supplies. A VAT registered farmer would, therefore, be entitled to reclaim VAT incurred on computerised calf feeders through their VAT returns.
Alternatively, farmers can remain unregistered for VAT purposes, and opt for the Flat Rate Farmer’s Scheme. This scheme is a long-standing arrangement under VAT law that allows farmers who remain unregistered for VAT purposes to be compensated on an overall basis for the VAT charged to them on their purchases of goods and services. It allows such farmers to charge and retain a “flat-rate addition” onto the amount that they charge for the agricultural goods and services they supply in the course of their farming business. The flat-rate addition is calculated as a percentage of the amount payable to the farmer and is based on the commercial agreements between the farmer and customer. The scheme is designed to reduce the administrative burden on farmers and allows them to remain outside the normal VAT system, thereby avoiding the obligations of registration and returns.
Unregistered farmers may also be able to avail of a VAT refund on certain expenses allowed for under the Value-Added Tax (Refund of Tax) (Flat-rate Farmers) Order 2012 (S.I. No. 201/2012) (“VAT refund order”). The VAT refund order allows for refunds to be claimed on outlay incurred on the construction, extension, alteration or reconstruction of a farm building or structure, on fencing, draining and reclamation of farmland, and the construction of qualifying equipment for the purpose of micro-generation of electricity for use in a farm business. Revenue advise that outlay for other purposes, such as computerised calf feeders, does not come within the scope of the refund order.
Finally, Revenue indicate that there has been no change in the rules applicable to reclaiming VAT on costs associated with computerised calf feeders in recent years.