Dáil Éireann Debate, Tuesday - 7 November 2023
324. Deputy Michael Healy-Rae asked the Minister for Finance the reason VAT cannot be claimed back on calf feeders under the TAMS grant (details supplied); and if he will make a statement on the matter. [48089/23]
View answerAs the Deputy will be aware, 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 the 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 be entitled to reclaim VAT incurred on automatic calf feeders through their VAT returns. Alternatively, farmers can remain unregistered and opt for the Flat Rate Farmer’s Scheme.
The Scheme is designed to reduce the administrative burden for farmers and allows them to remain outside the normal VAT system thereby avoiding the obligations of registration and returns. Unregistered farmers may 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). 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. The refund order does not provide for relief from VAT suffered on the acquisition of moveable goods such as farm machinery. As such, outlay incurred on the installation of certain feed systems has been allowed in certain circumstances where their installation is considered an alteration or reconstruction of a farm building or structure. However, Revenue consider that automatic calf feeders constitute movable goods and are therefore not provided for under the order.
Revenue is aware that there are numerous types of feed systems and that certain feed systems have changed or evolved to an extent that they do not require reconstruction of a building to install. Instead, they may be removed without causing significant damage. I am advised that Revenue has not changed their approach to the refund order, instead each product is assessed on its own merits. Products that do not meet the conditions of the refund order cannot qualify for a refund of the VAT.
