What is the Flat-Rate Farmer Scheme?
The Flat-Rate Farmer Scheme is a special VAT regime for unregistered Irish farmers. It compensates them for the VAT they bear on inputs like fertiliser, fuel and equipment without forcing them to register for VAT or file VAT3 returns.
Instead of charging VAT, the farmer adds a fixed flat-rate addition of 4.8% to the price of agricultural produce or services supplied to a VAT-registered customer. The buyer reclaims that 4.8% as input VAT on their own VAT3. The farmer stays outside the VAT system but still gets partial relief on input costs.
How the Flat-Rate Addition Works
- Sell to a VAT-registered buyer. A mart, processor or other registered business buys your livestock, milk, grain or other qualifying produce.
- Add 4.8% to the agreed price. Example: livestock sold for €1,500 → buyer pays €1,500 + (€1,500 × 4.8%) = €1,572.
- Buyer issues a self-billed invoice showing the addition separately.
- Buyer reclaims the addition as input VAT on their next VAT3.
- You keep the addition. No VAT return, no quarterly filing, no input-tax bookkeeping.
Who Qualifies for the Scheme?
The scheme is open to unregistered farmers — farming turnover below the VAT threshold and not registered voluntarily. Eligible activities include:
- Cattle, sheep, pig and other livestock production
- Dairy farming and milk supply
- Tillage, grain and horticultural produce
- Forestry and fishing for human consumption
- Agricultural contracting services (drainage, harvesting) supplied to other farmers
If you cross the VAT threshold or register voluntarily, you leave the flat-rate scheme and start charging standard or reduced VAT instead.
Current and Historical Rates
| Period | Flat-Rate Addition |
|---|---|
| January 2024 – Present | 4.8% |
| January 2023 – December 2023 | 5.0% |
| January 2022 – December 2022 | 5.5% |
| 2010 – December 2021 | 5.4% (5.2% pre-2010) |
Rates are set by Finance Acts. Always check Revenue's current rate before invoicing.
Worked Example
Sale: One bullock to a registered mart for an agreed price of €1,800.
Flat-rate addition: €1,800 × 4.8% = €86.40
Total paid by mart to farmer: €1,886.40
Mart's VAT3: reclaims €86.40 as input VAT.
Reclaiming VAT on Capital Costs
Even though you stay outside the VAT system, the Refund Order lets a flat-rate farmer reclaim VAT on certain capital costs — including the construction, extension or alteration of farm buildings, land drainage, and qualifying microgeneration equipment. Day-to-day farm equipment (milking parlours, calf feeders, meal bins) is generally not covered.