Holly Cairns
Question:446. Deputy Holly Cairns asked the Minister for Finance his views on permitting farmers to claim back VAT on farm safety equipment. [41758/22]
View answerTuesday, 26 July 2022
Questions (446)
Written answers
I am advised by Revenue that the VAT rating of goods and services is subject to EU VAT law, with which Irish VAT law must comply. In accordance with the EU and Irish VAT law farmers may elect to register for VAT or be treated as flat-rate farmers for VAT purposes.
Farmers who elect to register for VAT have an entitlement to reclaim VAT on costs incurred in relation to their agricultural business including farm safety equipment. A farmer who has elected to register for VAT is obliged to charge VAT on their supplies and can also claim a deduction for VAT incurred on costs that are used for the purposes of their taxable supplies.
Alternatively, farmers can remain unregistered and opt for the Flat Rate Scheme which is designed to compensate non-VAT registered farmers for the VAT incurred by them on the purchase of goods and services relating to their activities. The Scheme sets out a percentage amount, known as the flat-rate addition, which unregistered farmers apply to their prices when selling to VAT-registered businesses. Farmers are allowed to retain this amount themselves, as a compensation for the VAT borne by them on their input costs. This simplification reduces the administrative burden for them as there is no need to register for VAT to recover VAT borne on their inputs. The Scheme is governed by EU VAT law and the level of the flat-rate addition allowed under the Scheme is required to be reviewed annually. From 1 January 2022 the flat-rate addition is 5.5%.