Subject: Concerns over Illegal State Aid in Ireland
From: "Raymond O'Hanlon" <[email-masked]>
To: <[email-masked]>, <[email-masked]>, <[email-masked]>, <[email-masked]>, <[email-masked]>, "Info - RAM" <[email-masked]>, <[email-masked]>, <[email-masked]>, <[email-masked]>, <[email-masked]>, <[email-masked]>, <[email-masked]>, <[email-masked]>, <[email-masked]>, <[email-masked]>, <[email-masked]>, <[email-masked]>, <[email-masked]>, <[email-masked]>
Cc: <[email-masked]>, <[email-masked]>, <[email-masked]>, <[email-masked]>, <[email-masked]>, "alomohan.am" <[email-masked]>
Date: Fri, 1 Aug 2025 17:43:40 +0300

Tähelepanu! Tegemist on välisvõrgust saabunud kirjaga.
Tundmatu saatja korral palume linke ja faile mitte avada.

Dear Minister,

Recent disclosures—both through public studies and Freedom of Information 
records—reveal longstanding and systematic abuse of VAT mechanisms in 
Ireland’s farming industries. These abuses extend well beyond the relatively 
small Broiler Sector which has been in the news in recent weeks and raise 
serious questions about illegal state aid, ministerial oversight, and the 
credibility of fiscal governance within the Single Market.

A 2018 study by the Irish Tax Authority (Revenue) found that flat-rate VAT 
payments to Broiler farmers exceeded their input VAT costs by between 470% 
and 1,000%, depending on their trading structure. This disparity reflects 
not efficiency, but evasion—especially where fraudulent co-operatives were 
used to artificially inflate payment streams. Despite being informed of 
these findings during his term as Finance Minister, Mr. Paschal Donohoe did 
not act until July 2025, announcing the removal of the Broiler Sector from 
the Flat-Rate Addition Scheme only from September 1, 2025.

This delayed and limited intervention is deeply troubling when viewed 
against the wider context. Internal Revenue briefings obtained via Freedom 
of Information clearly state: “Abuse of flat-rate addition [fraud] happening 
in certain sectors. Example includes avoidance [evasion] in the poultry 
industry…” The plural “sectors” and the specific mention of pricing tactics 
used by processors are indicative of a broader problem—one that officials in 
both Revenue and the Department of Finance were well aware of. Yet only the 
Broiler Sector was excluded. This selective enforcement appears designed to 
placate DG Taxation while preserving systemic funding mechanisms leveraging 
VAT fraud for a small number of privileged processors.

Indeed, the use of VAT abuse as covert state aid aligns with strategic goals 
laid out in the Government’s 10-year agricultural plan of March 2000, which 
called for a reduction in poultry processors from 23 to 7. The forced 
closure of independent enterprises such as Cappoquin Poultry Plant in 
2013—where I served as Managing Director and shareholder—completed this 
consolidation. A mechanism that was supposedly designed to simplify VAT 
accounting for small farmers was instead weaponised against them to serve an 
industrial policy.

Concerns over this practice date back to 2014, when Mr. Alo Mohan, then 
Chair of the IFA’s National Poultry Committee, flagged abuse to Revenue on 
advice from the IFA’s Chief Economist. After being marginalised and put out 
of business for his intervention, Mr. Mohan—with support from MEP Marian 
Harkin—escalated the issue to DG Taxation, which conducted a pilot 
investigation. The Government responded not by reforming the scheme 
outright, but by introducing Section 86A of the VAT Consolidation Act 2010, 
permitting selective exclusion of a sector where it became impossible for it 
to sustain systemic fraud any longer.

Even before the exclusion of the Broiler sector comes into force, farmers 
are being advised by the IFA that they may remain in the flat-rate scheme 
for other enterprises—leaving the door open for fraudulent workarounds and 
the perpetuation of funding models that distort fair competition. This 
raises fundamental questions about whether the abuse was ever intended to be 
meaningfully addressed.

In a democratic, rules-based Union, public officials bear a responsibility 
not only to uphold financial integrity, but to ensure their policies foster 
fair access and competition. The record of Mr. Donohoe—and that of his 
predecessor Mr. Michael McGrath, now Commissioner for Democracy, Justice, 
Rule of Law and Consumer Protection—in enabling and legitimising VAT abuse 
as de facto illegal state aid, should exclude them from holding positions 
that influence the governance of the Single Market.

I therefore respectfully urge you and your fellow Finance Ministers to 
consider whether Mr. Donohoe remains a suitable President for the Eurogroup.

Yours faithfully,

Raymond O’Hanlon

Director, Preferred Results Ltd

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