Finance Bill 2025 [Certified Money Bill]: Committee Stage (Resumed)
Seanad Éireann — 2025-12-09
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Frankie Feighan (FG), Sligo-Leitrim

This section amends section 86 of the Value-Added Tax Consolidation Act 2010 which deals with special provision for tax invoiced by flat rate farmers. It confirms the budget reduction in the farmers flat rate addition from 5.1% to 4.5% with effect from 1 January 2026. The new 4.5% rate will continue to achieve full compensation for farmers under the flat rate scheme. The farmers flat rate scheme is reviewed each year in the run-up to the budget in accordance with criteria set down in the EU VAT directive. The rate is based on macroeconomic data relating to agricultural inputs and production and the prevailing VAT rate structures averaged over the preceding three years. Revenue's calculations based on data from 2023 to 2025 indicate that full compensation can be achieved by decreasing the rate to 4.5%. As overcompensation is not permitted under EU law, the change must be introduced in line with the relevant macroeconomic data. Were Ireland to leave the rate at 5.1%, it would lead to overcompensation and would likely trigger a state aid investigation. In addition to likely infringement proceedings against Ireland, the possible consequences of such an investigation include the Commission seeking to recoup any payments made to farmers and potentially restricting the operation of the flat rate addition scheme in Ireland. As macroeconomic data informs the rate that is set, I do not propose to accept the recommendation.

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Record URI: https://data.oireachtas.ie/akn/ie/debateRecord/seanad/2025-12-09/debate/main
Retrieved: 2026-08-14T04:54:26+00:00
Sitting date: 2025-12-09