Jimmy Deenihan
Question:184 Mr. Deenihan asked the Minister for Finance if he will exempt the VAT increase of 1% from new houses where contracts had been entered into before budget day; and if he will make a statement on the matter. [13085/03]
Written Answers. - VAT Rates.
The reduced rate of VAT increased from 12.5% to 13.5% on budget night with effect from 1 January 2003. The change in the rate was confirmed in the recent Finance Act.
Regarding the construction of new houses, where a private individual or any other un-registered person makes a final payment to a registered builder for the purpose of a new house the rate of VAT applicable is the rate in force at the time the payment was received by the builder. Where part or all of the payment was received by the builder before 1 January 2003, it is subject to the 12.5% rate. Where partial or full payments are made after 1 January 2003, they are subject to the new rate of 13.5%.
The increase in the reduced rate of VAT from 12.5% to 13.5% is an important part of the budgetary arithmetic. Consquently I have no plans to exempt the VAT increase of 1% from new houses where contracts were entered into before budget day.