The Irish Co-operative Organisation Society (ICOS) is concerned that the Budget 2026 cut to the flat-rate VAT top-up for farmers not registered for VAT will “cost farming communities several million euro in the years ahead”.

January will see a reduction from 5.1% to 4.5% in the top-up intended on compensating farmers not registered for VAT for the VAT they paid when buying farm inputs or selling farm goods.

Only a minority of farmers are registered for VAT and claim the exact VAT they incurred back directly.

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ICOS has warned that the 4.5% will not fully compensate all non-VAT registered farmers and the group has sought clarification from the Department of Finance on the issue.

Livestock sales are one of the areas ICOS has said that the change leaves farmers insufficiently compensated for the VAT they pay.

The co-op organisation’s sums put the loss at €2.86 for every €1,000 worth of livestock sold.

Anomaly

“The flat-rate scheme is meant to be simple, neutral and fair for farmers who are not VAT registered,” ICOS’s livestock and environmental executive Ray Doyle said.

“This change creates an anomaly where full VAT compensation is no longer achieved in all cases. On a typical sale of an animal for say, €1,000, the farmer will lose €2.86 per head, irrespective of the sales channel, factory, farm to farm or livestock mart.

“It may not sound like much for a single sale but it will all add up to several million euro of a loss for the sector when you take into account the overall sales volumes of livestock in Ireland.”