Relevant Matter
Legislation
Public Policy Area
Agriculture
Period
1 May, 2025 to 31 Aug, 2025
Specific Details
Flat Rate Addition (FRA) - Non VAT Registered Farmers - Council Directive 2006/112/EC - Poultry Growers
Intended results
To maintain status of poultry broiler farmers/growers in the FRA.
To propose that
- The EU Council Directive 2006/112/EC facilitates Member States who wish to operate a scheme for farmers to remain unregistered for VAT
- Ireland along with many other EU countries has operated a scheme for farmers to remain unregistered for VAT.
- The terms of the scheme are that farmers receive a top-up to their sales income via a flat rate compensation rate addition designed to compensate the farmer for the input VAT which they would otherwise have been entitled to had they registered for VAT.
- The Irish scheme currently compensates Irish farmers who remain unregistered for VAT at a rate of 5.1% of sales applicable to cattle, milk, poultry, grain and other agricultural produce.
- The EU regulations do not require that Member States set diSering flat rate compensation levels for the diSering sectors but Member States can at their discretion apply diSering rates to sectors at their discretion
- Ireland operates one flat rate compensation rate to all farmers who remain unregistered
- The flat-rate compensation percentage (currently 5.1%) is set by the Department of Finance each year with input from the CSO
- There has been some concern that poultry farmers have been overcompensated under the scheme as their input costs mainly consist of feed which attracts a 0% VAT rate.
- If sufficient information was available through the CSO to the Department of Finance, the Department of Finance could implement a separate flat rate compensation scheme for Poultry farmers at a rate that may be more appropriate to that sector.
- Presently it is our understanding that the CSO does not have the information required by the Department of Finance to determine a rate which would be considered more appropriate to the Poultry sector and it is understanding following consultation with the CSO that it will take a number of years before such information would be available.
- As a result of a complaint to the EU Commission about the flat rate addition overcompensating poultry farmers the Department of Finance, under time pressure to act on the matter, initially proposes that Poultry farmers are ejected from the flat rate scheme. This will cause the following diSiculties
1) Increased administration for farmers
2) The splitting of farm enterprises into VAT unregistered parts (dairy/beef) and vat registered parts (poultry)
3) An increased cashflow requirement as processors will need to pay poultry farms a sales price plus VAT at 13.5% which poultry farmers will be obliged to charge if VAT registered.
4) Increased administration for the Revenue Commissioners in dealing with a new cohort of VAT registered farmers.
- The Poultry committee of the IFA have in the past week agreed in principle with the three processors in Ireland a mechanism that will reduce the flat rate vat compensation paid to poultry farmers and will definitively debunk the position that poultry farmers are over compensated. This proposal will see the processors/Co-ops deduct the cost of the feed from the farmers' sales consideration prior to the application of the Flat Rate addition.
As a result the flat-rate compensation that poultry farmers will receive will be significantly reduced as the compensation will apply on the much reduced sales consideration.
- While there will be knock on inflationary impacts as farmers will require additional income from processors and ultimately consumers the necessary increases will be lessor than if the poultry broiler sector were removed completely.
- As mentioned the EU legislation specifically does not require sector by sector schemes, the IFA is seriously concerned that isolating poultry farmers from the flat-rate compensation scheme will set a precedent where other farming sectors may be targeted for exclusion in the future or for diSering flat rate schemes to apply to diSering sectors overstepping the requirements of the underpinning legislation.
To seek the opportunity to work with the Department of Finance in relation to this proposal which in our view will offer the best potential outcome for all parties.
To challenge the Government's decision to exclude broiler poultry farmers from the VAT Flat-Rate Addition (FRA) scheme, meaning that from September 1st next, broiler poultry farmers can no longer apply the 5.1% VAT addition to their broiler chicken sales.
To highlight that 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 have been imposed by government policy.
That 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.
To express disappointment that despite working tirelessly to find solutions and having numerous engagements with the Government on this, including current and former Minister's for Agriculture and the Minister for Finance, that they have ignored the lack of fairness at precluding broiler poultry farmers from this scheme.
That, even before this announcement, farmers were actively seeking price increases. They have been engaging with processors and retailers over the past few weeks and continue to do so to recover rising input costs. Poultry farmers cannot be expected to absorb a substantial cut in income imposed on them by the Government.
To highlight the complex nature of mixed family farming operations in Ireland, where the majority of broiler poultry farmers also have additional suckler, beef, dairy, or sheep enterprises. This complexity will make compliance with the new VAT rules even more difficult as these farmers will now be asked to separate their farm enterprises from a VAT perspective.
That 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.
To highlight that this decision will have potentially serious implications for the supply of Irish chicken to supermarkets, particularly as it makes us uncompetitive compared with imported product.
To challenge the unwise and short-sighted decision by the Government which cannot be at the expense of poultry broiler farmers' incomes. The reality is this will have to be passed through the price of chicken on the supermarket shelf
Name of person primarily responsible for lobbying on this activity
Francie Gorman IFA President, Patrick McCormick IFA Treasurer, Nigel Sweetnam IFA Poultry Chair, Andy Boylan IFA Monaghan, Sarah Hanley IFA Policy Executive
Did any Designated Public Official(DPO) or former Designated Public Official(DPO) carry out lobbying activities on your behalf in relation to this return? You must include yourself, and answer Yes, if you are a current DPO or a DPO at any time in the past. (What is a Designated Public Official?)
No
Did you manage or direct a grassroots campaign?
No
Was this lobbying done on behalf of a client?
No
Lobbying activity
The following activities occurred for this specific Subject Matter Area.
Informal communication (2-5)
Designated public officials lobbied
The following DPOs were lobbied during this return period on this specific Subject Matter Area. These DPOs were involved in at least one of the Lobbying Activities listed above, but not necessarily all of them.
As returns are specific to a Subject Matter Area the above Lobbying Activities may be associated with multiple returns.
Brian Purcell
Special Adviser (Department of Agriculture, Food and the Marine)
Fiona O'Connor
Special Adviser (Department of Finance)
Martin Heydon
Minister (Department of Agriculture, Food and the Marine)
Paschal Donohoe
Minister (Department of Finance)
David Maxwell
TD (Dáil Éireann, the Oireachtas)
David Maxwell
Councillor (Monaghan County Council)