ICOS raises 'discriminatory' VAT anomaly affecting marts and farmers

The decision to cut the flat-rate farmers VAT top-up from 5.1% to 4.5% came into effect at the start of this year

ICOS reiterated its call for the flat-rate addition to be amended to ensure farmers selling livestock through marts were not disadvantaged.

A delegation met with the Department of Finance officials on the cut to the flat-rate farmers VAT top-up.

The cut on the VAT top-up came into effect on January 1, 2026, and saw the original rate of 5.1% drop to 4.5%.

The delegation that met with department officials included Irish Co-operative Organisation Society (ICOS) livestock and environment executive Ray Doyle, general manager at Aurivo Marts Stephen Hannon, chief executive of Golden Vale Marts Maurice Lyons, and financial controller at Cork Marts Michael O’Connell.

ICOS has previously strongly opposed the measure and said it was now having a discriminatory impact on livestock marts and non-VAT registered farmers.

The organisation reiterated its call for the flat-rate addition to be amended to ensure farmers selling livestock through marts were not disadvantaged. This is particularly where livestock sales remain subject to the 4.8% VAT rate, while the flat-rate addition has fallen to 4.5%, creating an anomaly that leaves farmers under-compensated.

“We made the case that the flat-rate addition should be adjusted to align with the livestock VAT rate so that the scheme continues to fully compensate farmers, as originally intended, without distorting competition or imposing a hidden cost on livestock producers,” said Mr Doyle.

ICOS also raised concerns that while the Government had cited a CSO-based VAT calculation as the basis for the change introduced in last year’s budget, the formula underpinning that decision had not yet been provided.

The organisation stressed if the State needed to address balancing within the VAT system, this could and should be managed over an extended period rather than through a sharp deduction in one year that penalises farmers and marts, only to be potentially reversed in another.

“ICOS will continue to engage constructively with the department, but our position remains firm. Marts must not be discriminated against. Non-VAT registered farmers must not be financially penalised, and the flat-rate scheme must remain simple, fair and fit for purpose.

This is obviously also a priority in the current inflationary climate, which is burdening rural communities with additionally excessive costs,” Mr Doyle added.