The poultry broiler sector will be removed from the VAT flat rate addition (FRA) scheme from 1 September 2025.
Minister for Finance Paschal Donohoe made the decision on Wednesday based on advice provided by the Revenue Commissioners and the Department of Finance that overcompensation is occurring within the sector.
The FRA 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 a 5.1% addition to the price charged by the farmer for their supplies to a VAT registered person such as a meat processing business. Over 85% of farmers currently avail of the scheme.
Minister Donohue said: “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.”
Investigation
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.
Nigel Sweetman said that mixed farming operations will be asked to separate their farm enterprises from a VAT perspective. / Philip Doyle
From 1 September, poultry farmers 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.
“I understand the concern this will cause among impacted farmers and wants to emphasise that every effort was made to find a resolution for our poultry sector,” added Minister Donohue.
“However, this matter has come to a head and must be addressed.”
Response
Commenting on this, Irish Farmers’ Association (IFA) poultry chair Nigel Sweetman said excluding a single sector is unprecedented from an Irish perspective.
He said that the decision comes at a time when farmers are already under immense financial pressure.
“This is a massive blow to the broiler poultry sector which is already under massive pressure due to very significant increases in production costs some of which has been imposed on us by Government policy,” he said.
“The likely outcome of this is that some broiler poultry farmers may well exit the sector. It is also inevitable that the cost of chicken in supermarkets will also have to increase, meaning consumers will also carry the cost of the minister’s decision.”
In addition, Sweetman said that mixed farming operations will be asked to separate their farm enterprises from a VAT perspective.
“This decision adds another layer of red tape for already overburdened farmers. The Government [is] asking producers to overhaul their farm structures and tax arrangements in the middle of the year without providing any clear guidance on how to do so.”
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The poultry broiler sector will be removed from the VAT flat rate addition (FRA) scheme from 1 September 2025.
Minister for Finance Paschal Donohoe made the decision on Wednesday based on advice provided by the Revenue Commissioners and the Department of Finance that overcompensation is occurring within the sector.
The FRA 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 a 5.1% addition to the price charged by the farmer for their supplies to a VAT registered person such as a meat processing business. Over 85% of farmers currently avail of the scheme.
Minister Donohue said: “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.”
Investigation
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.
Nigel Sweetman said that mixed farming operations will be asked to separate their farm enterprises from a VAT perspective. / Philip Doyle
From 1 September, poultry farmers 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.
“I understand the concern this will cause among impacted farmers and wants to emphasise that every effort was made to find a resolution for our poultry sector,” added Minister Donohue.
“However, this matter has come to a head and must be addressed.”
Response
Commenting on this, Irish Farmers’ Association (IFA) poultry chair Nigel Sweetman said excluding a single sector is unprecedented from an Irish perspective.
He said that the decision comes at a time when farmers are already under immense financial pressure.
“This is a massive blow to the broiler poultry sector which is already under massive pressure due to very significant increases in production costs some of which has been imposed on us by Government policy,” he said.
“The likely outcome of this is that some broiler poultry farmers may well exit the sector. It is also inevitable that the cost of chicken in supermarkets will also have to increase, meaning consumers will also carry the cost of the minister’s decision.”
In addition, Sweetman said that mixed farming operations will be asked to separate their farm enterprises from a VAT perspective.
“This decision adds another layer of red tape for already overburdened farmers. The Government [is] asking producers to overhaul their farm structures and tax arrangements in the middle of the year without providing any clear guidance on how to do so.”
Read more
Monaghan farmers seek to overturn poultry planning permission ban
UK imports of Irish poultry up 19% in 2024
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