Value-added tax (VAT)

3 Capital expenditure VAT refund:

Farmers who are unregistered can get a refund on the VAT element of any invoices relating to capital expenditure, for example land improvement, yards, fencing, drainage or buildings etc. Repairs are not covered. Fixed equipment, such as milking parlours, scrapers, bulk tanks etc. are allowed. You can claim VAT back on items purchased in the last four years.

4 Flat-rate VAT refund:

Ensure that you are being paid at the rate of 5.4% on all sales from 1 January 2017 if you are unregistered.

5 VAT on farm sale:

If you are unregistered for VAT and selling the farm – or a portion of – where you completed buildings within five years of the VAT reclaim, you will be liable for VAT on the sale.

6 For VAT registered farmers:

If you are registered for VAT, ensure you do not collect the flat-rate VAT. Inform those who you sell to that you are registered for VAT. You must ensure you have all invoices for the VAT return. Ensure you reclaim VAT on purchases of stock from unregistered farmers. VAT on livestock is at 4.8% when you are registered.

7 VAT on sale of basic payment entitlements:

Where a farmer is selling basic payment or single farm payment entitlements, and the process exceed €37,500, the transaction is liable to VAT at 23%.

The seller needs to register and charge the VAT and pay over to revenue the VAT charged.

If you purchase entitlements you are not entitled to reclaim the VAT. However, if you are registered for VAT it can be reclaimed.

8 Contracting and other farm services:

If a farmer carries on agricultural services and/or contracting and the turnover exceeds €37,500 you must register for VAT. This could bring the whole business into the VAT net.

Proper planning can help to avoid this.

9 Ceasing to farm VAT refund:

VAT reclaimed in the last 12 months prior to ceasing is repayable to revenue.

Watch the date you cease.

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