The government has confirmed that the flat-rate compensation measure for farmers will decrease from 5% to 4.8% from January 1, 2024.
The move is part of Budget 2024 which was unveiled today (Tuesday, October 10) in the Dáil by Minister for Finance Michael McGrath.
The decrease will save the government €18 million annually, according to documents from the Department of Finance.
The flat-rate addition compensates farmers who are not VAT registered for VAT incurred on their purchases.
It is the amount that unregistered farmers add to their price when supplying agricultural produce or agricultural services to a VAT registered business.
Last year, as part of Budget 2023 the government decided to cut the flat rate addition from 5.5% to 5% from January 1, 2023.
Farmers
Meanwhile, Minister McGrath also announced the extension of other key tax reliefs for farmers in Budget 2024, while increasing their overall value.
The minister said that consanguinity relief on stamp duty would be extended for five years.
The relief provides for a 1% rate of stamp duty to be applied on the transfer of agricultural land – by sale or purchase, exchange or gift – if it is made to certain close relations including a husband, wife, child, stepchild, or nephew and niece.
The finance minister also confirmed that the accelerated capital allowances for farm safety equipment would be extended.
The government will also increase the maximum aggregate lifetime limit of a number of farm-related tax reliefs to €100,000, up from €70,000, which is the maximum allowable aggregate relief under the EU regulations.
The maximum amount of enhanced stock relief for farmers who are partners in a registered farm partnerships will be increased from €15,000 to €20,000, in line with EU regulations.
The land leasing income tax relief will be amended so that it only becomes available when the land has been owned for seven years.