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  • VAT refund on farming expenses

    Posted by Colm on 22 August 2021 at 3:17 pm

    Is it possible to claim a refund of VAT on expenses related to farm equipment and machinery in Ireland?

    I am recently VAT registered in Ireland and also have various costs for the upkeep of the farm land. Any help here would be great along with any tips on the process and if there is any threshold for claiming back VAT on farm cost in general and the type of costs etc.

    Also, I have a neighbour who is also a farmer, can he claim back VAT on similar costs if he’s not registered for VAT?

    Rebecca replied 2 years, 6 months ago 2 Members · 1 Reply
  • 1 Reply
  • Rebecca

    Member
    31 August 2021 at 12:03 pm

    VAT registered farmers in Ireland are entitled to a refund of a minimum VAT amount of €125 for year in question.

    The type of farming costs that qualify for a VAT reclaim are as follows: construction and reconstruction of farm buildings, construction and surfacing of farm roadways, installation of farm water pumps and wells, fitting of crushes, drafting and handling systems, installation of fixed farm generators, milking machines, milk tanks, plate coolers, feed barriers, automatic scrapers, cubicles and mats, fixed calf feeders, penning, calving gates, fitting of effluent tanks, slurry channels, silage pits, and construction of dungsteads.

    VAT can also be claimed back on fencing expenses, drainage, or reclamation of any land, the installation of water troughs, gates, railings, security gates, and cameras.

    Electrical equipment, such as water heaters, solar panels, parlour augers, fixed wash-down pumps, lighting, and ice builders will also qualify.

    The total of any VAT claim must be for more than €125 which needs to be made online. A farmer can either make a claim through their own online portal, either via Revenue’s Online System, or via their Revenue ‘myaccount’ profile.

    Alternatively, a farmer can engage their accountant or tax consultant to make a claim on their behalf. There is no need to wait until after the end of the current tax year, so any expenditure already incurred in 2021 also qualifies for a refund now.

    Claims for VAT refunds can be made to Revenue for expenditure incurred within the previous four years. For building work and equipment that qualified for a Department of Agriculture grant, it is possible to both make a claim for such a grant and separately to get a refund of the VAT, where the building or equipment meets the criteria.

    To complete the claim, you will need to submit online details of each invoice to include the VAT number of the supplier, the invoice number, the date of the invoice, the amount of the invoice, and the amount of recoverable Vat.

    Detail must also be supplied as to the type of work done or the type of equipment or farm building constructed.

    In the event that a taxpayer owes Revenue in respect of income tax, PAYE, capital gains tax or other taxes, or, indeed, where tax returns are outstanding, it’s highly likely that Revenue will withhold and offset any VAT to be recovered under the Vat 58 process.

    Refunds are usually paid directly to a taxpayer’s bank account. Where VAT is recovered under the Vat 58 procedure, the expenditure is usually capitalised in the farm accounts, meaning that the expenditure is allowed as a deduction against taxable profits over an eight-year period, rather than regarded as repairs or maintenance offset against one year’s profits.

    VAT refund for unregistered farmers

    For unregistered farmers, VAT is not recoverable on equipment, such as round feeders, drills, welders, tractors, implements, and mobile generators.

    However, unregistered farmers are able to recover VAT on qualifying micro-generation equipment, including wind turbines and photo-voltaic generating panels. For the VAT to be recoverable by an unregistered farmer, the costs must be on items for use in the farming business for at least a year.

    For this reason, your neighboring farmer who is unregistered for VAT is not entitled to recover VAT on repairs, maintenance, fuel, or other consumables. Equally, a wind turbine or water well used exclusively for a private residence does not qualify for a VAT refund.

    Do farmers have to register for VAT?

    If you engage solely in agricultural production activities, you are not obliged to register for Value-Added Tax (VAT).

    However, you are obliged to register where:

    your annual turnover from agricultural contracting activities other than insemination services, stock minding and stock rearing exceeds, or is likely to exceed, €37,500.

    your annual turnover from sales of bovine semen, exceeds, or is likely to exceed, €75,000. Note: this turnover figure excludes sales to other farmers licensed as an Artificial Insemination centre or supplies to persons over whom you exercise control.

    • your annual turnover from retail sales of horticultural products exceeds, or is likely to exceed, €75,000.you are in receipt of services which are taxable where received.
    • your annual turnover from sales of bovine semen and retail sales of horticultural products exceeds, or is likely to exceed, €75,000.your annual turnover from intra-Community acquisitions exceeds, or is likely to exceed, €41,000.
    • your annual turnover from taxable goods or services, other than any exclusions mentioned above exceeds, or is likely to exceed, the appropriate thresholds.

    You may also elect to register for VAT.

    Sources and additional information can be found here:

     

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