Dáil Éireann Debate, Thursday - 4 July 2024
109. Deputy Brendan Smith asked the Minister for Finance if the Revenue Commissioners have been engaging with farmers and farming organisations in relation to VAT requirements; and if he will make a statement on the matter. [28622/24]
Amharc ar fhreagra121. Deputy Michael Moynihan asked the Minister for Finance his plans to review the VAT treatment of farmers; and if he will make a statement on the matter. [28505/24]
Amharc ar fhreagraI propose to take Questions Nos. 109 and 121 together.
The Deputy should note at the outset 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, and each farmer’s decision on this matter affects how VAT incurred on their inputs is treated.
Under VAT law, farmers can avail of the Flat-rate Farmers Scheme and remain unregistered for VAT. The scheme allows unregistered farmers to add and retain a percentage charge (known as the “flat-rate addition”) onto the amount they invoice VAT-registered businesses whom they supply with agricultural goods and services in the course of their farming business.
However, in addition to the compensation for flat-rate farmers provided by the Flat-rate Scheme, Irish VAT law also permits flat-rate farmers to reclaim VAT they incur on some particular business expenditure, as set out in the 2012 Refund Order. The Refund Order is permitted under EU law, subject to certain conditions, including that its scope is not extended. This means that the order may not be altered to permit refunds of VAT incurred on farming business costs that are not currently provided for in the order.
I am advised by Revenue that they can only administer the refund order according to the legislation as enacted. Revenue will continue to monitor refund claims for new and innovative products as they are received but can only refund expenditure that is within the scope of the legislation.
Revenue has engaged with the farming sector on the VAT Refund Order (ICMSA and IFA). Revenue officials also attended the Joint Oireachtas Committee on Agriculture, Food and Marine on 8 May.
Following a review of submissions from the representative groups, Revenue published a Tax and Duty Manual on 4 June 2024 to provide guidance on the Refund Order. The manual outlines how VAT can be reclaimed under the Order, the conditions under which VAT may be reclaimed, the types of expenditure on which VAT can be reclaimed, and the information required to make a claim.
Finally, it should be noted that it is always open to a farmer to elect to register for VAT in respect of their farming business and claim a full deduction for the VAT they incur on their business costs, subject to rules on deducibility.
