ICOS urges fair flat‑rate VAT scheme ahead of Budget 2027

The Irish Co‑operative Organisation Society (ICOS) has called on the government to ensure the farmers’ flat‑rate VAT scheme remains simple, fair and fit for purpose as Budget 2027 approaches.

Speaking to an Oireachtas Joint Committee on Agriculture and Food, ICOS highlighted that the current inflationary climate is adding excessive costs for rural communities. It noted a “negative anomaly” created by Budget 2026, where non‑VAT‑registered farmers selling livestock through marts are deducted 0.3 % VAT – the gap between the livestock VAT rate of 4.8 % and the flat‑rate addition of 4.5 %.

ICOS proposes that the flat‑rate addition should never exceed the livestock rate in any year and urges the anomaly be corrected in the upcoming Budget 2027. The society said the disparity is contributing to a decline in animal throughput at marts this year.

Department of Finance principal officer Niall O’Sullivan told the committee that the flat‑rate scheme is a simplification measure permitted under the EU VAT Directive, designed to reduce administrative burden for the over 85 % of farmers who use it. He explained that the flat‑rate addition is reviewed annually by Revenue Commissioners using a statistical formula based on macro‑economic data, and may be adjusted up or down.

O’Sullivan noted that the current flat‑rate addition of 4.5 % is lower than the long‑standing 4.8 % livestock rate, but argued this does not create unfairness in the tax system. He acknowledged that the differential may encourage some farmers to prefer direct sales over mart transactions and said there is scope to reduce the livestock rate to match the flat‑rate payment if the 2027 addition remains below 4.8 %.

Source: Agriland. Photo: KIM GUAN CHU / Pexels.