Dáil Éireann Debate, Tuesday - 25 November 2025
262. Deputy Niall Collins asked the Tánaiste and Minister for Finance if he will consider deferring a requirement to register VAT for poultry farmers (details supplied) in order to allow more time to restructure; and if he will make a statement on the matter. [65459/25]
View answerThe VAT treatment of goods and services is subject to the requirements of EU VAT law with which Irish VAT law is obliged to comply. In general, the EU VAT Directive provides that suppliers of goods and services are required to register for VAT, and to charge and account for VAT on the supplies they make. The Directive also provides that VAT-registered businesses are entitled to claim deductions for VAT they incur on making their supplies.
The Directive allows Member States to operate a simplification arrangement, known as the SME scheme, under which businesses do not need to register for VAT provided their turnover in the current and previous calendar years do not exceed the threshold set by the relevant Member State. The turnover thresholds in Ireland are €85,000 in the case of a business engaged in the supply of goods, and €42,500 for a business engaged in the supply of services or in the supply of both goods and services.
The Directive provides for a further simplification arrangement known as the farmers flat-rate (FFR) scheme which is designed to reduce the administrative burden on farmers. The FFR scheme allows farmers to remain outside the normal VAT system, thereby avoiding the obligations of registration and returns, while permitting them to charge and retain a “flat-rate addition” on the agricultural supplies they make in the course of their farming business, as a way of compensating, on an overall basis, for VAT incurred by FFR farmers on their purchases of goods and services.
With effect from 1 September 2025, broiler chicken services have been excluded from the FFR scheme in accordance with an Order made by my predecessor under Section 86A of the Value-Added Tax (Consolidation) Act 2010. The making of this Order followed extensive consideration of a 2019 report to the Minister for Finance by the Revenue Commissioners of the review Revenue conducted which showed that the broiler chicken services sector was engaged in practices and business models that were leading to systemic overcompensation of the sector under the FFR scheme, contrary to what is permitted by the Directive. Despite the report and repeated engagement by my Department with representatives of the sector, including over the past year, it was clear that the relevant practices and business models in the sector had not changed substantially in the intervening period, and therefore, it was necessary to exclude the sector from the FFR scheme – as is provided for under Section 86A – in order to ensure that Ireland appropriately observes its obligations under EU law to guard the scheme from systemic overcompensation.
Upon exclusion from the flat-rate scheme, broiler chicken services are required, under EU law, to be treated similarly to other services supplied by businesses in Ireland. Amendments to section 6 of the Value-Added Tax Consolidation Act 2010 which are included in section 67 of Finance Bill 2025 (as passed by Dáil Committee) will legislate for this.
Of course, such suppliers may avail of the SME scheme, where applicable to them. Agricultural activities covered by the FFR scheme are not included in the calculation of the threshold for the purposes of the SME scheme. However, once a business is VAT registered, the registration overs all activities of the business. This means that a farming business which is VAT-registered cannot also avail of the FFR which, in accordance with EU law, is solely available for unregistered farmers.
Therefore, following enactment of the Finance Bill, farmers who supply broiler chicken services will be required to register for VAT from the date their supplies of goods and services, other than those covered by the FFR scheme, reaches €42,500 in a calendar year. Thus, there is already lead in time to allow mixed farmers restructure their enterprises, if they so desire.
Revenue has already issued detailed guidance for broiler farmers regarding the implications of the Section 86A Order, and Revenue will shortly issue further guidance on enactment of the Finance Bill. Any delay in aligning the registration requirement for broiler chicken services with other agricultural supplies outside the FFR scheme, and other taxable goods and services, would undermine the integrity of both the FFR and SME schemes, and exposes Ireland to the risk of infringement proceedings by the European Commission.
Finally, it is important to note that the FFR scheme is solely designed to reduce the administrative burden on farmers. No additional VAT is incurred by a farmer who registers for VAT. When registered, the farmer is obliged to charge VAT on their supplies and is entitled to claim a deduction for VAT incurred on inputs used for the purposes of making those taxable supplies.
