Paul Kehoe (Wexford, Fine Gael)
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400. To ask the Minister for Finance if income that is earned from leasing farmland is subject to VAT; and if he will make a statement on the matter. [30373/22]

Paschal Donohoe (Dublin Central, Fine Gael)
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I am advised by Revenue that the VAT rating of goods and services is subject to the requirements of EU VAT law, with which Irish VAT law must comply. In general, the EU VAT Directive provides that all goods and services are liable to VAT at the standard rate, unless they fall within categories of goods and services specified in the VAT Directive, in respect of which Member States may apply a lower rate of VAT or exempt from VAT.

In accordance with the Directive, the supply by a taxable person of a lease or letting of immovable property, such as farmland, is an exempt activity subject to conditions, therefore, the payment for the lease or letting is not liable to VAT. Each lease or letting agreement is determined on its own merits as to whether it constitutes an exempt letting for VAT purposes.

A landlord can also exercise the option to charge VAT on the rent of a lease or letting of immovable property. When a landlord leases or lets the immovable property, they must do one of the following to confirm the option to tax: include a written provision for the taxation of the rent in the letting agreement, or issue a document to the tenant stating that VAT is chargeable on the letting. The lease or letting in these circumstances is subject to the standard rate of VAT, currently 23%.