Aisling Dempsey (Meath West, Fianna Fail)
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110. To ask the Minister for Finance if he would consider allowing farmers to average their taxable income over a multi-year period; and if he will make a statement on the matter. [55749/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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A farm income stabilisation tax measure currently exists in the form of income averaging. Section 657 of the Taxes Consolidation Act 1997 allows farmers to pay tax based on the average of five years’ farming profits and losses.

The measure allows eligible farmers to be charged tax on the average of the aggregate farming profits and losses over a five-year period. Tax is charged on the average income of the year in which the election is made and the four tax years immediately preceding that year, thus smoothing their tax liability over a five-year cycle.

Further details on income averaging can be located on Revenue's website, at the following link: www.revenue.ie/en/self-assessment-and-self-employment/farm/farming/income-averaging.aspx.

Aindrias Moynihan (Cork North-West, Fianna Fail)
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112. To ask the Minister for Finance the reasoning for the reduction in the farmer’s flat rate payment under VAT from 5.1% to 4.5%. [55806/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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The Flat-Rate Addition is reviewed each year in the run-up to the Budget in accordance with criteria set down in the EU VAT Directive. It is based on macro-economic data (i.e. agricultural inputs and production and the prevailing VAT rate structures) averaged over the preceding three years.

Revenue’s calculations based on data for 2023, 2024 and 2025 suggest that full compensation can be achieved by decreasing the rate to 4.5%. The methodology takes account of the final estimates of farming inputs, outputs and the VAT rate structures for 2023 and 2024, and a provisional forecast of agriculture inputs and outputs in 2025 as provided by the CSO, and the VAT rate structure for 2025.

The calculation of the Farmer’s Flat Rate for 2026 includes a tentative estimate of current year (2025) farming inputs and outputs, which will be subject to future revision.

In line with this, the rate will be reduced from 1 January 2026 as per the announcement in Budget 2026.