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Press release

Removal of Poultry Broiler Sector from Flat Rate Addition Scheme

The Minister for Finance, Paschal Donohoe T.D. has made the decision to remove the poultry broiler sector from the VAT Flat Rate Addition scheme from 1 September 2025. This decision has been made based on advice provided by the Revenue Commissioners and the Department of Finance that overcompensation is occurring within the sector.

The flat-rate addition scheme compensates farmers, that are not VAT registered, for the VAT incurred by them on input costs used in the course of their farming activities. This is achieved through the addition of a flat-rate percentage (currently 5.1%) to the price charged by the farmer for their supplies to a VAT registered person such as a meat processing business.

The use of a flat-rate scheme for farmers is provided for under EU legislation, however a key element of the scheme is that it should not lead to a situation where farmers are overcompensated for VAT incurred by them on their business costs. Following an investigation in 2018, Revenue determined that there was a significant amount of overcompensation occurring in the poultry sector. The matter has subsequently been re-examined over the last 18 months and it has been determined that overcompensation is still occurring. This has resulted in Minister Donohoe’s decision to remove the sector from the scheme.

From September 1, 2025, farmers in the poultry (broiler) sector will not be able to charge the flat rate addition on the sale of their goods and services. Instead they will be required to register for VAT if the level of their poultry broiler business is above the relevant VAT registration threshold in order to claim back VAT on their inputs. Farmers can register for VAT even if they are operating below this threshold.

Commenting today, the Minister for Finance, Paschal Donohoe T.D. said:

“I have made the decision to remove the poultry (broiler) sector from the flat rate addition scheme with effect from 1 September. This has been a difficult decision to make however in my role as Minister for Finance I am required to have regard for the welfare of all farmers who avail of the scheme. As the EU VAT Directive does not permit overcompensation, failure to take this action could undermine the integrity of the scheme as a whole.

I understand the concern this will cause amongst impacted farmers and wants to emphasise that every effort was made to find a resolution for our poultry sector. However, this matter has come to a head and must be addressed.

I have asked Revenue to provide the appropriate level of assistance and guidance on this matter to the affected farmers. In this regard queries can be directed to businesstaxesregistrations@revenue.ie

Notes to the Editor

  1. The flat-rate addition scheme compensates farmers that are not VAT registered for the VAT borne on input costs incurred by them in the course of their farming activities. This is achieved through the addition of a flat-rate percentage (currently 5.1%) to the price charged by the farmer for their supplies to a VAT registered person such as a meat or dairy processing business. The VAT-registered business treats the flat-rate amount as a normal business input in its periodic VAT return, claiming input credit for the flat rate amount charged by the flat rate farmer.
  2. The scheme allows farmers to avoid the burden of VAT accountability and over 85% of farmers avail of it.
  3. The use of a flat-rate scheme for farmers is provided for under EU legislation, however the use of the scheme should not lead to a situation where farmers are overcompensated for VAT incurred by them on their business costs.
  4. Following a complaint about the sector Revenue undertook a comprehensive review in 2018 to establish if there was evidence of overcompensation. This review, provided to the Minister for Finance in 2019, established that there was a very significant overcompensation of farmers availing of the flat rate scheme in the sector.
  5. Due to other factors, including Brexit and the Covid-19 pandemic, this matter was not further considered until July 2023.
  6. Officials in the Department of Finance and Revenue have engaged extensively with the sector in relation to this issue. Additional information provided by the sector indicates that while the overcompensation has reduced from the initial Revenue report, it is still quite significant.
  7. As part of the review of this matter, officials in the Department of Finance, Revenue and the CSO investigated whether it would be possible to create a sector specific flat rate percentage to be applied to the poultry broiler sector. Unfortunately, it is not possible to develop a separate lower flat rate for the poultry broiler sector due to the required data not being available.
  8. In the event that a separate lower flat rate for the poultry broiler sector is developed in the future then the sector can be reinstated within the flat rate addition scheme.
  9. Officials in Revenue and the Department of Finance are satisfied that poultry broiler sector should be removed from the VAT flat rate scheme given the level of overcompensation poses a risk to the integrity of the scheme.
  10. The IFA have advised that there are approximately 600 farms who would be affected, including mixed farms.
  11. Once a farmer is not able to charge the flat rate addition on the sale of their goods and services they will have to register for VAT to claim back VAT on their inputs. The VAT registration thresholds are €42,500 for services and €85,000 for goods. Farmers can register for VAT even if they are operating below these thresholds.
  12. Where farmers have queries on this matter they can be directed to Revenue via email to businesstaxesregistrations@revenue.ie.