Farmers who are not registered for VAT got €88 million back in refunds from Revenue last year, according to the Minister for Finance, Michael McGrath.

In general businesses that are not registered for VAT are not allowed to reclaim any VAT.

But a total of 35,896 farmers applied for VAT refunds in 2023 under the “Refund Order” which allows unregistered farmers to claim refunds for VAT incurred on certain farming business expenditure.

This includes:

  • the construction, extension, alteration or reconstruction of farm buildings or structures;
  • the fencing, draining or reclamation of farmland;
  • the construction, erection or installation of qualifying equipment for the micro-generation of electricity for use in the farm business.

There is also a Flat-rate Farmers Scheme in place for unregistered farmers to “add and retain” a percentage charge (known as the “flat-rate addition”) onto the amount they invoice VAT-registered businesses that they supply with agricultural goods and services.

But any spending by flat-rate farmers on any other farming business inputs, such as farm equipment for example milk bulk tanks, calf feeders, meal bins and milking parlour equipment does not fall “within the scope” of the Refund Order.

VAT refunds

Farming and organisations and a number of TDs and senators have called on Revenue to clarify their current “interpretation of the law” on the Refund Order as some farmers and manufacturers claim it has changed dramatically.

Minister McGrath told the Dáil this week that Revenue “have confirmed that they have not changed their interpretation of the law on the Refund Order”. 

But he added: “In recent times, though, their risk-assessment of claims has identified ineligible claims for the refund of VAT on various types of farm equipment, which is outside the scope of the Refund Order. 

“Revenue’s refusal of such ineligible claims has led to queries from the farming and the farm equipment sectors.

“My department and Revenue are engaging with the farming sector to explain the situation in relation to the law and the claims process.”

The Minister for Finance also detailed that Revenue has confirmed that “updated guidance will be published shortly after engagement with the sector so that further information will be available on the Refund Order”.

Latest figures show that over the last 10 years a total of €711.8 million has been refunded by Revenue to unregistered farmers under the Refund Order.

Source: Revenue