Vol. 472 No. 8
57 Mr. Callely asked the Minister for Finance the consideration, if any, he has given to the cost of child care, particularly crèche costs; the submissions, if any, he has received in this respect; and if he will agree to review this matter. [24214/96]
I have received a number of submissions regarding the VAT treatment of child minding services and income tax relief for parents in respect of the cost of child care.
As regards the question of VAT, the position in this regard is governed by European VAT law, with which Irish VAT law complies fully. Under the EU Sixth VAT Directive, education is an exempt service for VAT purposes, but this exemption does not extend to child care services or nurseries. Such facilities are liable for VAT when they are provided in the course or furtherance of business and if their annual turnover exceeds or is likely to exceed £20,000. However, non-profit making child minding services provided by public bodies or recognised charities are exempt from VAT. In addition, creches and playschools which follow a clear educational programme may be exempt if they come within the terms of the exemption for children's education. In the majority of cases, it is the experience of the Revenue Commissioners that child care services rather than education are provided by such crèches and playschools. In such instances, VAT would be chargeable on the child care element. It is a matter for the Revenue Commissioners to determine whether a particular facility is liable for VAT.
As regards income tax, any proposal in this area will be considered in the context of the 1997 budget and the benefits of any such proposals will be considered in comparison to other possible tax changes. The costs of child care tax reliefs are, however, substantial and, needless to say, there are other priority uses for such tax resources.
