The flat-rate addition for farmers who are not registered for VAT has increased by 0.2% to 5.4% from 1 January 2017.
Announced last month in Budget 2017, the increase is worth approximately 0.05c/l on milk, 0.75c/kg on beef and 0.9c/kg on lamb at current prices.
But, in total, the increase will be worth €9m this year to farmers and it will bring the total value of the addition this year to €243m.
The flat-rate addition is paid to non-registered farmers to compensate them for the VAT they pay on purchase of inputs such as machinery, diesel, electricity, etc.
It is added to price when these farmers sell milk, livestock, grain or other produce to registered bodies such as marts, meat factories, co-ops and agri-merchants.
Separately, non-registered farmers can directly reclaim VAT they are charged when investing in farm buildings or land drainage work. They must apply to Revenue for this repayment and must show supporting invoices.
Registered farmers
Farmers who are registered pay VAT when buying inputs and services but can then reclaim these VAT amounts from Revenue.
According to Declan McEvoy, IFAC head of tax, only about 10% of farmers are registered. Broadly, it makes sense to do so when the amount paid out on VAT is significantly higher than the value of the flat-rate addition on farm sales, he said.
About 95% of tillage farmers are registered. The amount of VAT they can reclaim after buying machinery and sprays is higher than they would get under the flat-rate addition. Most dairy and suckler farmers are not registered. There is no VAT on their major inputs, which are feed and fertilizer. The flat-rate addition is sufficient to compensate them for the VAT amounts they do pay, eg on vet services, machinery and bought-in livestock.A small number of dairy and cattle farmers who consistently buy in livestock also chose to register because the VAT they are charged when buying livestock is greater than the value of the flat-rate addition on their sales. The VAT rate on livestock, including sheep and pigs, is 4.8%. Unlike farmers, other sole traders, eg painters or mechanics, must register for VAT once their turnover exceeds a threshold, currently €37,000 per annum.
The flat-rate addition for farmers who are not registered for VAT has increased by 0.2% to 5.4% from 1 January 2017.
Announced last month in Budget 2017, the increase is worth approximately 0.05c/l on milk, 0.75c/kg on beef and 0.9c/kg on lamb at current prices.
But, in total, the increase will be worth €9m this year to farmers and it will bring the total value of the addition this year to €243m.
The flat-rate addition is paid to non-registered farmers to compensate them for the VAT they pay on purchase of inputs such as machinery, diesel, electricity, etc.
It is added to price when these farmers sell milk, livestock, grain or other produce to registered bodies such as marts, meat factories, co-ops and agri-merchants.
Separately, non-registered farmers can directly reclaim VAT they are charged when investing in farm buildings or land drainage work. They must apply to Revenue for this repayment and must show supporting invoices.
Registered farmers
Farmers who are registered pay VAT when buying inputs and services but can then reclaim these VAT amounts from Revenue.
According to Declan McEvoy, IFAC head of tax, only about 10% of farmers are registered. Broadly, it makes sense to do so when the amount paid out on VAT is significantly higher than the value of the flat-rate addition on farm sales, he said.
About 95% of tillage farmers are registered. The amount of VAT they can reclaim after buying machinery and sprays is higher than they would get under the flat-rate addition. Most dairy and suckler farmers are not registered. There is no VAT on their major inputs, which are feed and fertilizer. The flat-rate addition is sufficient to compensate them for the VAT amounts they do pay, eg on vet services, machinery and bought-in livestock.A small number of dairy and cattle farmers who consistently buy in livestock also chose to register because the VAT they are charged when buying livestock is greater than the value of the flat-rate addition on their sales. The VAT rate on livestock, including sheep and pigs, is 4.8%. Unlike farmers, other sole traders, eg painters or mechanics, must register for VAT once their turnover exceeds a threshold, currently €37,000 per annum.
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