Not allowing farmers to reclaim VAT on farm equipment has widened the gap between the actual purchase cost and the Department of Agriculture’s reference costs by 90%.

Recent changes to the flat rate VAT scheme, which allowed unregistered farmers to reclaim VAT on certain expenditure on farm investments, have thrown TAMS reference costs further out of line with actual costs.

Minister for Finance, Michael McGrath, said in response to Joe McHugh TD that the “acquisition of feed bins, milk bulk tanks, automatic calf feeders, milking parlour equipment and automatic scrapers do not come within the scope of the refund order”.

This means that unregistered farmers will no longer be able to reclaim the VAT on these items.

TAMS reference costs are VAT exclusive, which did not present an issue in the past when VAT could be reclaimed.

However, at a flat rate VAT amount of 23% on the above items, the actual costs are set to jump overnight and slash the percentage grant aid farmers will receive.

Irish Farmers Journal analysis on a four-station automatic calf feeder puts the purchase price at €22,750, or €18,500, plus VAT of €4,250. In the past, farmers were able to reclaim the VAT, so the net cost of the feeder was €18,500.

At a grant aid reference cost from the Department of €13,700 and a 40% grant rate, farmers received a grant of €5,480 or about 30% of the initial purchase price.

Now that farmers are not allowed to reclaim VAT, the purchase price of €22,750 and a grant rate of 40% on €13,700 means the farmer still gets €5,480, or about 24% of the purchase price.

Further analysis showed that a standard 8,000l internal bulk tank has a reference cost of €24,289.40 under TAMS.

Actual costs are around €36,900 including VAT. With the TAMS grant at the 40% rate, €9,715.76 is reclaimable by the farmer – 26% of the actual cost.


The IFA has said it is engaging with affected farmers, and the suppliers of these items.

“We are assisting a number of these with compiling appeals to the Tax Appeals Commissioner. As with any such appeal, this is not a quick process.

To bring certainty to this matter for farmers, and to ensure that required investments continue to be made on farms, we are asking the Minister for Finance to consider an addition to the relevant Statutory Instrument that will add clarity and ensure that fixtures, which are an integral part of a farming structure, are eligible for a refund, as they have been previously.”

The president of ICMSA Pat McCormack has described the decision to rescind the VAT rebate to farmers buying bulk milk tanks, calf feeders and other items as petty, and yet more evidence that a deliberate anti-dairy policy is being pushed throughout all agencies of Government.

What was previously doable, has – at a stroke – been rendered impossibly expensive for most dairy farmers, he said.