Dáil Éireann Debate, Tuesday - 27 January 2026
374. Deputy Michael Fitzmaurice asked the Tánaiste and Minister for Finance the changes in VAT for farmers that sell livestock in marts; and if the funding from same is going to the Exchequer; and if he will make a statement on the matter. [5450/26]
Amharc ar fhreagraThe 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 accordance with the EU VAT Directive, farmers can elect to register for VAT or can remain unregistered.
Under VAT law, unregistered farmers can avail of the Flat-rate Farmers Scheme, an administrative simplification arrangement unique to the farming sector, which allows farmers to remain unregistered for VAT – thereby remaining outside the VAT system and avoiding the burden of registration and filing – and yet be compensated on an overall basis for the VAT incurred by such farmers in the course of their business. As is normal for VAT-unregistered businesses, unregistered farmers are not entitled to reclaim VAT incurred on the various individual inputs used in their farming business. However, the Scheme allows unregistered farmers to add and retain a percentage charge (known as the “flat-rate addition”) onto the amount they invoice VAT-registered businesses whom they supply with agricultural goods and services, including livestock, in the course of their farming business. In this regard, livestock means live cattle, sheep, goats, pigs and deer and horses normally intended for use in the preparation of foods stuff or in agricultural production.
The level of the flat-rate addition is calculated in accordance with the EU VAT Directive and is set out in Irish VAT legislation. It is reviewed annually on the basis of macro-economic data received from the Central Statistics Office (CSO) for the preceding three years in line with the EU VAT Directive requirements. Following such review, if needed, the level of the flat-rate percentage is re-set under law, in order to ensure that the Scheme continues to allow appropriately for the unregistered farming sector to be fully compensated, on an overall basis, for the VAT it incurs across all its inputs – those inputs being variously taxed at the VAT standard rate of 23%, the reduced rate of 13.5%, the second reduced rate of 9%, the livestock rate of 4.8%, and the zero rate. Some years the review results in an upward re-set of the flat-rate, some years it results in a downward re-set.
During 2025, the flat-rate percentage was subject to the normal annual review, following which the level was re-set in Finance Act 2025 at 4.5% with effect from 1 January 2026, which is lower than the 5.1% level that applied following the 2024 review. The new 4.5% level for the flat-rate addition in 2026 will continue to achieve full compensation for farmers under the flat-rate scheme.
The Deputy is asking about farmers selling livestock at marts. No change has been introduced specifically regarding the selling at marts. Under existing VAT rules, where a farmer sells livestock at an auction – such as at a mart – the sale is treated for VAT purposes as being two transactions: firstly, a sale by the selling farmer to the auctioneer, followed by a subsequent sale by the auctioneer to the purchaser. Detailed guidance on the sale of live animals at auction/mart is published by Revenue and is available on its website at:
www.revenue.ie/en/tax-professionals/tdm/value-added-tax/part10-special-schemes/sale-of-live-animals-by-auction-mart/sale-of-live-animals-by-auction-mart.pdf.
Where a flat-rate farmer (i.e. VAT-unregistered farmer) sells at a mart, assuming the mart/auctioneer is VAT-registered, the flat-rate farmer will be entitled to charge the flat-rate addition, which since 1 January 2026 is 4.5%. In accordance with the Flat-rate Scheme, the flat-rate farmer is entitled to retain the flat-rate addition.
Where a VAT-registered farmer sells goods, the appropriate VAT rate applies to the sale. The VAT rate applicable to the supply by a VAT-registered person of livestock (whether sold at a mart or otherwise) is the livestock rate of 4.8%; this is a special reduced rate permitted under EU VAT Law which has remained unchanged for many years. The VAT-registered farmer is obliged to account for the VAT on the sale in the normal way as part of the farmer’s regular VAT return.
