Jackie Cahill (Tipperary, Fianna Fail)
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185. To ask the Minister for Finance if the VAT rebate that is paid to a farmer in relation to the VAT on the sale of timber from a site is based on the gross price received for the timber; and if he will make a statement on the matter. [60028/22]

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 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. Revenue understands that this farmer is an unregistered farmer and is selling timber to a VAT registered purchaser.

Farmers who elect not to register for VAT are not entitled to recover VAT incurred on their expenses. However, they can avail of the Flat-Rate Farmers Scheme. The Scheme, which is permitted under the Directive, is designed to compensate VAT unregistered farmers, commonly referred to as flat-rate farmers, for the VAT incurred on goods and services they used in the course of their farming business. It allows such farmers to charge and retain a “flat-rate addition” onto the amount they charge for the agricultural goods and services they supply in the course of their farming business.

The flat-rate addition is calculated as a percentage of the amount payable to the farmer by the VAT registered purchaser for their supplies. It is a matter of fact based on the commercial agreements between the farmer and the VAT registered purchaser. Where a flat-rate farmer supplies agricultural produce or services to a VAT registered purchaser, the farmer should issue a flat-rate invoice showing details of the transaction. However, in practice the purchaser issues a settlement voucher which contains the details required on the invoice.

The information required on a flat-rate invoice includes the price, exclusive of the flat-rate addition for the supply, the flat-rate addition rate and amount appropriate to the price shown on the invoice.