A TD has claimed that the reduction in the flat rate of VAT announced in Budget 2026 will cost farmers over €61 million this year.

The VAT Flat Rate (FFR) scheme is for farmers who are not registered, or required to register, for Value-Added Tax (VAT).

These farmers are commonly referred to as flat-rate farmers. The majority of farmers are not registered for VAT.

These farmers are allowed to add and retain a percentage charge - known as the flat-rate addition - onto the amount they invoice VAT-registered businesses who they supply with agricultural goods and services in the course of their farming business.

The flat-rate addition was 5.1% in 2025. In Budget 2026 it was announced that the farmer's flat-rate addition would fall to 4.5% from January 1 this year.

Sinn Féin spokesperson for agriculture Martin Kenny said the loss farmers are making as a result of this change is "very concerning".

He said: "In a response to a parliamentary question I asked the Minister for Finance, I have been informed that it is estimated that the exchequer will gain €61.5 million this year from the change in the flat rate of VAT in last year’s budget.

"This is money that is being taken out of farmers pockets at a time when farmers are struggling financially with increased input costs this year such as fertiliser and meal, plus the skyrocketing cost of fuel in the last few months," he added.

The Sligo-Leitrim TD said that the situation "has angered a lot of farmers, particularly at marts around the country where farmers who are selling livestock can see on their sales receipt that they are paying VAT".

"While VAT has always been charged at the livestock rate of 4.8%, this would usually be offset by a VAT credit at the flat rate which was 5.1% last year," Kenny said.

"However, as the flat rate has gone below the livestock rate, farmers are now paying VAT on sales for the first time in years," the TD explained.

He added: "Farmers that are unregistered for VAT can claim back VAT at the flat rate on fixed items like slatted sheds, but due to the reduction in the flat rate the amount that they can claim back is less than in other years.

"This is of huge concern to farmers, and I would hope that the Minister for Finance would examine this in this year's budget and hopefully bring the rate back up or at least above the livestock rate," Kenny said.