Changes to the flat-rate VAT scheme are costing non-VAT registered farmers around €4m at mart sales this year, the Irish Co-operative Organisation Society (ICOS) has said.

Since 1 January, the flat-rate VAT top-up reduced from 5.1% to 4.5%. VAT on livestock sales remains at 4.8%, resulting in a 0.3% differential. As a result, non-VAT registered farmers who sell to other non-VAT registered farmers in marts are being deducted €2.80 per €1,000 of livestock sold, Ray Doyle of ICOS said.

With mart turnover at around €2bn, the move will see the Revenue tax take from livestock sales in marts increase by around €4m.

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However, if these farmers choose to bypass the mart, there is no deduction applied. The change to the rate is discriminating against marts, he said.

“This is pushing more cattle sales to be private and unregulated. There’s no protection for sellers there. Selling livestock through the mart ensures security of payment and transparency around ownership,” he said.

ICOS has called on the Department of Finance to amend the flat-rate farmers VAT top-up to align with the livestock sales figure of 4.8%.

Meanwhile, the change to the flat-rate VAT top-up is costing a typical 100-cow dairy farmer €1,200 when milk price is taken at 40c/l, including VAT.