Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

I will do my best. This section amends section 86 of the Value-Added Tax Consolidation Act 2010, which deals with special provisions for tax invoiced by flat-rate farmers. It confirms the reduction in the farmers’ flat-rate addition from 5% to 4.8% with effect from 1 January 2024. The new 4.8% rate will continue to achieve full compensation for farmers under the flat-rate scheme.

The farmer’s 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 must be 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 2021 to 2023 indicate that full compensation can be achieved by decreasing the rate to 4.8%. Overcompensation is not permitted under EU law.

The change must be introduced in line with the relevant macroeconomic data. This calculation is done by the Revenue Commissioners using CSO data and it is also subject to audit by the European Union.