The Minister for Finance, Jack Chambers, has announced in Budget 2025 that the Flat Rate Scheme rate will be increased from the current 4.8% to 5.1% from January 1, 2025.
Minister Chambers said: “The House will be aware that the flat-rate scheme compensates unregistered farmers on an overall basis for VAT incurred on their farming inputs.
“Based on macro-economic data received from the Central Statistics Office and the Revenue Commissioners for the period 2022-2024, it is proposed that this rate be increased from the current 4.8% to 5.1% from January 1, 2025.”
The flat-rate addition is the amount that unregistered farmers add to their price when supplying agricultural produce or agricultural services to a VAT registered business.
Previously in Budget 2023 the government cut the flat rate addition from 5.5% to 5% from January 1, 2023, then in Budget 2024 it was reduced from 5% to 4.8% from January 1, 2024.
Budget 2025
Minister Chambers highlighted in the Dáil today (Wednesday, October 1) that agriculture and the agri-food sector “is of vital importance in our economy”.
“This sector is embedded in our communities and wider society.
“Irish farmers play an important role in providing high quality food domestically and for export and are highly regarded for quality produce and farming methods,” he added.
Earlier this year Revenue published new guidance on the application of the VAT Refund Order for flat-rate farmers.
The legislation sets out that farmers can only claim refunds for VAT in relation to:
- The construction, extension, alteration or reconstruction of farm buildings or structures;
- The fencing, draining or reclamation of farmland;
- The construction, erection or installation of qualifying equipment for the micro-generation of electricity for use mainly in the farm business.
The new guidance comes after months of uncertainty over the issue of certain VAT refunds.
Unregistered farmers have been able to claim back VAT on certain “qualifying expenditure” under the Refund Order since 1972.