Ryan O'Meara (Tipperary North, Fianna Fail)
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285. To ask the Minister for Agriculture, Food and the Marine if he is concerned that farmers are unable to claim VAT rebates on large standalone diesel generators on farms, especially in the wake of Storm Éowyn and increasing reliance among farmers on electricity for their operations; and if he will make a statement on the matter. [24925/25]

Martin Heydon (Kildare South, Fine Gael)
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The Minister for Finance is responsible for tax policy and the Office of the Revenue Commissioners is responsible for the operation of the tax system and is independent in carrying out that function.

They advise that 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 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 VAT registered farmer would be entitled to reclaim VAT incurred on farm equipment such as large standalone diesel generators.

Alternatively, farmers can remain unregistered and opt for the Flat Rate Farmer’s Scheme. This scheme is a long-standing arrangement under EU and national VAT law that allows farmers who remain unregistered for VAT purposes to be compensated on an overall basis for the VAT incurred on their purchases of goods and services. It allows such farmers to charge and retain a “flat-rate addition” onto the amount that they charge for the agricultural goods and services they supply throughout their farming business. The scheme is designed to reduce the administrative burden on farmers and allows them to remain outside the normal VAT system, thereby avoiding the obligations of registration and returns.

Unregistered farmers may also be able to 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) (“VAT refund order”). This 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 on the construction, erection, or installation of qualifying equipment for the micro-generation of electricity for use in a farm business. Outlay for other purposes, such as on the acquisition of large standalone diesel generators does not come within the scope of the refund order. It is not possible under EU law to expand the scope of the VAT refund order.

I acknowledge that different types of expenditure in agriculture can evolve quickly as agricultural technology develops. My officials are available to provide any technical assistance required by the Office of the Revenue Commissioners.