Niamh Smyth (Cavan-Monaghan, Fianna Fail)
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117. To ask the Minister for Finance further to Parliamentary Question No. 1279 of 17 January 2024, if clarity will be provided in the case of a person (details supplied). [8472/24]

Michael McGrath (Cork South Central, Fianna Fail)
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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, and this affects how VAT incurred on their inputs (such as the purchase of farm equipment) is treated. Eligibility for grant funding under the Targeted Agricultural Modernisation (TAMS) scheme has no bearing on, nor interaction with, the application of VAT law, including The Value-Added Tax (Refund of Tax) (Flat-rate Farmers) Order 2012 (S.I. No. 201/2012).

Farmers who elect to register for VAT are obliged to account for VAT on their supplies and are entitled to claim a deduction for VAT incurred on inputs used for the purposes of their taxable supplies. Therefore, VAT-registered farmers would be entitled to reclaim the VAT incurred on farm equipment, including robotic or automatic scrapers, and this should be done through their normal VAT returns.

Alternatively, farmers can remain unregistered for VAT and opt for the Flat-Rate Farmer’s Scheme. This Scheme is a simplification arrangement permitted under the Directive. It is designed to reduce the administrative burden for farmers by allowing unregistered farmers to be compensated on an overall basis for VAT on inputs, while remaining outside the VAT system, thereby avoiding the burdens associated with registration and filing. It allows such farmers to add a percentage charge (known as the “flat-rate addition”) onto the amount they invoice VAT-registered businesses whom they supply with agricultural goods and services in the course of their farming business. Unlike VAT-registered businesses, unregistered farmers are not entitled to a deduction for VAT incurred on individual inputs used in their farming business; instead, the Flat-rate Scheme permits them to charge and retain the flat-rate addition in order to compensate them, on an overall basis, for the VAT across all their inputs.

There are certain limited situations in which flat-rate farmers are specifically permitted to claim a refund of the VAT incurred by them on particular inputs. The Value-Added Tax (Refund of Tax) (Flat-rate Farmers) Order 2012 (S.I. No. 201/2012) allows for refunds to be claimed on outlay incurred on:

-the construction, extension, alteration or reconstruction of farm buildings or structures;

-the fencing, draining and reclamation of farmland; and

-the construction and/or installation of qualifying equipment for the purpose of micro-generation of electricity for use in a farm business.

Outlay incurred by flat-rate farmers on the acquisition of farm equipment, does not come within the scope of the refund order. However, where the installation of the equipment requires the alteration or reconstruction of a farm building or structure, the corresponding expenditure on the alteration or reconstruction of the building or structure, including equipment or elements of equipment permanently installed in the farm building or structure, may be allowed in certain circumstances. The equipment must be permanently installed in the farm building or structure and, once installed, cannot be removed without causing significant damage or destruction to the farm building or structure or to the equipment itself.

I am advised by Revenue that there are different types of scrapers available on the market. Outlay incurred by flat-rate farmers on the acquisition of robotic scrapers does not come within the scope of the refund order. However, outlay incurred on certain automatic scrapers is allowed.

Michael McGrath (Cork South Central, Fianna Fail)
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Savings with an Irish bank, or other deposit taker such as a credit union or An Post, are generally subject to Deposit Interest Retention Tax (DIRT) at a rate of 33% (USC does not apply and PRSI may apply). DIRT will be deducted by the deposit taker unless the account is specifically exempt.

Whether or not an account held by a person in receipt of an invalidity pension is exempt from DIRT depends on that person’s specific facts and circumstances. There is no automatic DIRT exemption for a person in receipt of an invalidity pension. However, the following exemptions may, depending on the particular facts and circumstances, be relevant to those in receipt of invalidity pensions:

1. DIRT does not apply where a deposit account is held by an individual who is permanently incapacitated by reason of mental or physical infirmity from maintaining himself or herself;

2. DIRT also does not apply where a deposit account is held by an individual who is 65 years or older, or whose spouse / civil partner is 65 years or older, and whose income is below certain thresholds.

I am advised by Revenue that further information on these exemptions, and how to claim them if the exemption is applicable, is set out in Revenue’s Tax and Duty Manual 08-04-08, which is available on the Revenue website at: www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-08/08-04-08.pdf