Indirect Taxes

Key measures for indirect tax

The VAT rate on non-oral respiratory vaccines for livestock will be reduced from 23% to 9%.

The farmer’s flat rate payment, which compensates unregistered farmers for VAT incurred on purchases, will increase from 4.5% to 4.8% effective from 1 January 2027.

The VAT Charity Compensation Scheme fund will increase to €15 million for 2027, thereby giving charities access to a larger pool of financial support.

In light of elevated fuel prices, temporarily reduced excise rates in place since April 2026 will remain at these levels until 28th of February 2027. The Carbon tax on Kerosene and Natural gas will be reduced to €48.50 per tonne of CO₂ emitted i.e. the rate paid in 2023. If the carbon tax remained on its envisaged trajectory, it would have cost €78.50 per tonne from 1 May 2027. An Tánaiste confirmed that the carbon tax on kerosene and natural gas will remain at this level for the lifetime of the current Government.

The NORA levy is currently effectively suspended and full restoration is delayed until 31 December 2026, and the enhanced Diesel Rebate Scheme is maintained at the higher temporary level i.e. 12c per litre rather than 7.5c per litre until the end of 2026.

A pack of 20 cigarettes will increase by €1, with a pro-rata increase on other tobacco products. There will also be a 20c per millilitre charge levied on vaping fluid.

A new betting charge for totalisator or pool betting is being introduced, generally commencing on 1 January 2027. The rate of excise duty will be 25% on commissions earned. There will be an exemption for on course pool bets.

The Vehicle Registration Tax (VRT) relief for electric vehicles (EVs), which was due to end on 31 December 2026, is being extended for two years to 31 December 2028.

Who will be affected and when?

Farmers who cannot fully recover input VAT will benefit from the reduced 9% VAT rate on non-oral respiratory vaccines for livestock from 1 January 2027. Suppliers will need to update their VAT rate for these products from the same date.

Farmers who are not VAT-registered will receive additional support through the increased flat rate addition.

Charities will have access to a larger pool of support through the VAT Charity Compensation Scheme fund increasing to €15 million.

Electric vehicles purchasers will continue to benefit from the VRT relief until 31 December 2028. However, purchasers of Category A passenger cars with CO₂ emissions above 80g/km will see an increased VRT cost from 1 January 2027.

What now? 

Veterinary suppliers should update their systems for the reduced 9% VAT rate on non-oral respiratory vaccines for livestock from 1 January 2027.

Unregistered farmers should factor the increased flat rate addition into their 2027 position.

Charities should consider whether the increased VAT Charity Compensation Scheme fund may provide additional support.

Deloitte's view on Budget 2027 measures

The VAT measures in Budget 2027 are relatively targeted but they will have practical consequences for a range of sectors.

We welcome the reduction in VAT rate and the increase in flat rate addition to support animal health and farm productivity and the wider agricultural sector.

The increase in the VAT Charity Compensation Scheme fund to €15 million is also a welcome measure to provide relief for charities with limited VAT recovery.

The measures ease near-term energy and transport costs while increasing taxes on tobacco and vaping products. The €1 increase on a pack of 20 cigarettes, proportionate increases for other tobacco products and the 20c-per-millilitre charge on vaping fluid align with established anti-smoking policy, while raising consumer costs.

Extending reduced petrol and diesel excise rates to February 2027 gives businesses, particularly transport-intensive operators, greater cost certainty. Their phased return towards normal levels by June 2027 will nevertheless need to be reflected in forecasts and pricing.

Holding the carbon tax on kerosene and natural gas at €48.50 per tonne for the current Government’s lifetime, delaying full restoration of the NORA levy and retaining the higher enhanced Diesel Rebate Scheme rate through 2026 provide further relief. This is to be welcomed at a time when global factors are exerting significant pressure on oil prices.

Extending electric-vehicle VRT relief to end-2028 supports fleet-planning certainty and the transition away from fossil-fuel vehicles and maintains the commitment to de-carbonisation.