Frances Fitzgerald
Question:118 Ms F. Fitzgerald asked the Minister for Finance if he will consider the removal of VAT from both new and second-hand musical instruments.
Written Answers. - Value Added Tax.
The supply of new musical instruments is liable to VAT at the standard rate of 21 per cent. Under the terms of the EC VAT Rates Directive, Ireland is precluded from the application of any rate of VAT other than the standard rate to these items.
At present, no special arrangements exist in relation to the VAT treatment of supplies of second-hand goods generally, including musical instruments: thus, the supply of second-hand musical instruments is also currently liable here to VAT at the standard rate. However, the draft EC 7th VAT Directive proposes that, in future, special arrangements will apply to the subsequent resale of second-hand goods which will take account of any residual VAT from the initial supply of the goods. The principle which would apply to such sales is that VAT, at the standard rate, would be charged on the dealer's margin. Following discussions at yesterday's ECO/FIN Council meeting, it is hoped that the draft Directive will be adopted shortly.