From 1 September 2025, broiler producers can no longer use the farmer’s flat-rate VAT addition scheme.

Minister for Finance Paschal Donohoe announced this decision after Revenue deemed that broiler farmers were being “overcompensated” by the 5.1% flat-rate addition – receiving more money back than they actually paid in VAT on inputs, which violates EU VAT rules.

This affects around 600 farmers, including many with mixed operations, forcing them to choose between staying unregistered (absorbing VAT costs) or registering for VAT and filing regular returns.

Ireland’s flat-rate scheme allowed unregistered farmers to add 5.1% to their selling price when invoicing VAT-registered buyers.

For example, on a €2.00 chicken sale, farmers could add €0.10 (5.1%), receiving €2.10 total. The buyer treated this as VAT and reclaimed it from Revenue, while the farmer kept the addition to offset VAT paid on inputs like electricity and equipment.

Over 85% of Irish farmers use this scheme because it eliminates VAT paperwork hassle and generally covers routine VAT expenses.

However, Revenue’s 2018 investigation (updated recently) deemed that broiler farmers were receiving significantly more through the flat-rate than their actual input VAT costs.

Why the change?

EU law permits flat-rate schemes only when they roughly compensate input VAT – no more.

Revenue found the 5.1% addition was too generous for broiler operations, creating “overcompensation” that threatened the scheme’s integrity for all farmers.

The Irish Farmers Association called this unprecedented sector-specific removal concerning, warning it will add costs and red tape that could force some farmers to exit the sector or increase chicken prices.

What changes for farmers

Broiler farmers lose the right to charge the 5.1% flat-rate addition but remain “flat-rate farmers” unless they voluntarily register for VAT. Unlike other businesses, farmers aren’t obliged to register regardless of turnover – there’s no €85,000 threshold requirement.

Farmers must now decide to stay unregistered and absorb VAT costs, or register voluntarily to reclaim input VAT. VAT -registered farmers must:

  • Charge 13.5% VAT on broiler sales.
  • Submit VAT returns (typically bi-monthly).
  • Keep proper VAT records.
  • Apply VAT across all farming activities, not just poultry.

    • VAT registration brings significant paperwork burdens. Farmers must issue proper VAT invoices, track input VAT meticulously, and file returns every two months.

    This represents a major administrative shift for farmers who’ve avoided VAT compliance.

    Revenue has promised guidance and support during the transition. Farmers should consider investing in accounting software or professional help, especially initially.

    For mixed farms: VAT registration applies to the entire operation – you cannot selectively apply it to different enterprises unless businesses are genuinely separated for VAT purposes.

    Every broiler farmer should analyse their situation by:

  • Calculating historical flat-rate benefits versus actual input VAT paid.
  • Projecting future VAT liability on planned purchases.
  • Considering administrative capacity for VAT compliance.
  • Evaluating planned investments – VAT registration allows full input credit recovery on major purchases.
  • If staying unregistered: Accept the loss of flat-rate addition and budget for absorbed VAT costs.

    • If farmers are planning on registering for VAT they should:

  • Contact Revenue or tax advisers early (processing takes time).
  • Update billing systems for 13.5% VAT from 1 September.
  • Inform processors/buyers of VAT status change.
  • Establish proper record-keeping systems.

    • Next steps

    The change takes effect 1 September 2025, giving farmers two months to prepare.

    Revenue has committed to providing transition support, and farmers should engage with agricultural advisers or accountants for guidance. Don’t wait until the last minute. Use the coming months to decide on VAT registration.