Specific Details
VAT 58
Intended results
To make a submission in support of the inclusion of all items that are integral to the functioning and structure of farm buildings. Subsequent a meeting with the Office of the Revenue Commissioners IFA has been made aware of issues relating to the refund of VAT for the installation of water systems and water troughs. This is also covered in this submission.
Milk Bulk Tank
The milk bulk tank is a necessary piece of equipment for a dairy enterprise. A building which is named the “dairy” is specially designed to accommodate the bulk tank. The tank itself cannot be easily removed and has a life span of 20 plus years. While the bulk tank is equipment in nature, the tank is permanently fixed in place within the building it is housed in.
Considerable time, effort and expense would be involved in removing it. The tank would only be dissembled and separated from the building once its useful life has ended. In most instances due to the tank size once installed a concrete wall will be erected with an access door. To remove the tank either the wall will need to be knocked or the roof removed.
Paragraph 89 of Explanatory notes on EU VAT place of supply rules on services connected with immovable property that enter into force in 2017 (Article 13b explanatory note) states “Therefore, to be considered as immovable property, what needs to be checked is whether in the absence of those elements (i.e. if they were to be removed) the nature of the building or construction would in itself be changed in a way that it could not be used according to the function it was designed for.”
Article 94 States "Therefore, a suitable test would be the following an item installed in a building or construction would be considered as making up an integral part of the building or construction when it contributes to making the building or construction complete according to the features ordinarily associated with a building or construction and according to the function to be given to that building or construction.”
Without the bulk milk tank, the dairy building would serve no purpose, so it is an integral part of the building and without it the building could not be used for the function it was built.
Further paragraph 105 of same explanatory notes states “..items permanently installed' in a building or construction do not necessarily imply that those items are attached to the building or construction by means of a tab, clip or any other type of link.
An industrial machine which, by its characteristics (dimension, weight, and so on), is installed permanently in a plant could for example cause destruction to (part of) the plant when removed (for example if it were necessary to remove the roof, or to demolish a wall in order to extract the machine).”
Automatic calf feeders
Calf feeders are plumbed and wired in place within the calf rearing shed. This is completed by specialized installers. The shed itself will be wired and plumbed to accommodate the use of the feeders. While the feeders can be unplumbed and removed, the shed itself is structurally adapted to accommodate the use of the feeds. The work involved in constructing/adapting the shed to accommodate the feeders is what transforms the shed into a calf rearing unit.
Paragraph 89 of Explanatory notes on EU VAT place of supply rules on services connected with immovable property that enter into force in 2017 (Article 13b explanatory note) states “Therefore, to be considered as immovable property, what needs to be checked is whether in the absence of those elements (i.e. if they were to be removed) the nature of the building or construction would in itself be changed in a way that it could not be used according to the function it was designed for".
The removal of the automatic calf feeders from a calf rearing unit designed for such would mean the building is not complete and would not serve the purpose it was designed for.
Further the removal of the feeder would require professionals to complete such a task as these are not only plumbed, wired and fixed in place but the technology that make up these units means a qualified technician would be required for such a task.
Automatic calf feeders are a complex system fitted into a purposely designed building. This differs from other calf feeding equipment which are mobile and therefore ineligible for VAT refund.
Meal bins
Meal bins are more akin to a structure as opposed to a piece of equipment. The bins are specially designed structures to allow for the ease of filling and storing meal for cattle. Historically, a building may have been constructed for this purpose. In recent times, these large storage units, which are installed by specialist installers, on custom-made foundations have replaced the need for a building to store meal.
The bins are fixed in place and once assembled, can only be moved by use of heavy machinery while incurring the risk of potential damage or destruction of the structure. The fact that a bin is connected to a feed system such as to an auger feeding into a milking parlour should not determine whether the VAT is reclaimable or not. The cost, size, construction, and professional expertise required to install a meal bin is the same, whether connected to a feeding system or not.
Cubicle and slat mats
Cubicle and slat mats are fixed in place, usually with screws and/or bolts. Once fixed in place they are difficult to remove and are only taken up once they have come to the end of their useful life (circa 10 plus years). The mats are fixed in place within the building and remain so until they are no longer useful. These mats form part of the structure of the facility they are installed in and are an integral part of making the building usable.
The explanatory note around Article 13b paragraph 111 would also apply here “…whether the removal of the item would cause certain damage to the item itself can be an extra indicator, for instance if once removed, the item needs to be repaired, has no value or serves no purpose or not the same purpose anymore.”
In most instances the removal of such mats happens at the end of their useful life so would hold no value for the purpose they were originally intended and only value they may retain if any is their scrap value".
Water systems
Water systems are an integral part of land infrastructure where livestock are grazing. In many instances the installation of these systems is part of land reclamation that may also include the laying of new roadways and installation of new fences to stock proof and subdivide the land. The installation of a water system is a major undertaking and usually involves the laying of pipes by mechanical means.
The pipes are usually buried underground to protect against damage from weather, machinery, and animals. In addition, large water troughs will be installed at intervals to provide water for drinking by the cattle. Once installed the removal of the pipe work is nearly impossible and the water troughs due to their size remain in place for their useful life; moving these troughs can result in breakage or cracks leading to water leakage.
Again, relevant paragraphs from the explanatory note on Article 13b mentioned above apply to water systems and water troughs, including paragraph 111, whereby even if it was possible to remove such a system the cost and damage would make it an unfeasible undertaking.
IFA are satisfied that the above items should be eligible for VAT refund under the VAT 58 refund process. Bulk tanks, calf feeders, meal bins and livestock mats form part of the structural work of the building and are installed at significant expense by professional installers. In addition, the building within which they are installed needs to be structurally altered or designed to accommodate the items.
Removal in most instances renders the building not fit for the purpose it was designed and built for. Similarly, with the water system and troughs, removal is not a realistic option given the permanency of installation. Attempted removal would cost significantly more than the resale value would realise and the potential damage done would render the pipes and troughs unusable.
IFA firmly believes that non-VAT registered farmers should be entitled to reclaim VAT on these items under the VAT 58 system.
To meet with the Taoiseach to highlight the issues surrounding the VAT 58 refunds.
Amii McKeever
Adviser to Minister (Department of Agriculture, Food and the Marine)
Barry Cassidy
Special Adviser (Department of Agriculture, Food and the Marine)
Brian Leddin
TD (Dáil Éireann, the Oireachtas)
Claire Kerrane
TD (Dáil Éireann, the Oireachtas)
Denis O'Donovan
Senator (Seanad)
Jackie Cahill
TD (Dáil Éireann, the Oireachtas)
Joe Flaherty
TD (Dáil Éireann, the Oireachtas)
Johnny Mythen
TD (Dáil Éireann, the Oireachtas)
Leo Varadkar
Taoiseach (Department of the Taoiseach)
Lynn Boylan
Senator (Seanad)
Martin Heydon
Minister of State (Department of Agriculture, Food and the Marine)
Michael Collins
TD (Dáil Éireann, the Oireachtas)
Michael Fitzmaurice
TD (Dáil Éireann, the Oireachtas)
Michael McGrath
Minister (Department of Finance)
Michael Ring
TD (Dáil Éireann, the Oireachtas)
Padráig Mac Lochlainn
TD (Dáil Éireann, the Oireachtas)
Paul Daly
Senator (Seanad)
Paul Kehoe
TD (Dáil Éireann, the Oireachtas)
Paul Savage
Assistant Secretary (Department of Agriculture, Food and the Marine)
Pearse Doherty
TD (Dáil Éireann, the Oireachtas)
Philip O'Callaghan
Special Adviser (Department of the Taoiseach)
Tim Lombard
Senator (Seanad)
Victor Boyhan
Senator (Seanad)
Michael Lowry
TD (Dáil Éireann, the Oireachtas)
Brendan Gleeson
Secretary General (Department of Agriculture, Food and the Marine)