Dáil Éireann Debate, Tuesday - 11 February 2014
152. Deputy Gerald Nash asked the Minister for Finance if he will consider providing opportunities for the coach travel sector to reclaim VAT on fuel on the purchase of second-hand coaches and parts and tyres essential to the operation of the sector's business; and if he will make a statement on the matter. [6535/14]
View answerThe transport of passengers and their accompanying baggage is exempt from VAT, this includes services provided by the coach and bus sector. This means that a person who provides a bus or coach service does not register for VAT and does not charge VAT on the supply of their services. This also includes the hiring of a coach with a driver. Persons who are exempt from VAT cannot recover VAT on goods and services, such as fuel, tyres and mechanic charges, used for the purposes of the person's coach service.
VAT law in Ireland must comply with the EU VAT Directive. As passenger transport was exempt in Ireland on 1 January 1978, it is possible under the VAT Directive to continue to apply that exemption. Allowing an exempt coach business to deduct VAT on its inputs is the same as applying a zero rate of VAT and this is not allowed under EU VAT law unless such VAT treatment applied on and from 1 January 1991. As passenger transport services were not zero rated on 1 January 1991, we are not entitled to apply a zero rate to passenger transport services now.
However, with regard to the VAT incurred on the purchase of a touring coach, I would point out that while persons who are VAT exempt cannot recover any VAT incurred on goods and services incurred in relation to their business, there is special provision within the VAT code to allow a refund of VAT incurred on the purchase of touring coaches. Under VAT Refund Order S.I. 266 of 2012 coach operators who are exempt from VAT may, subject to the conditions in the Order, be entitled to a refund of the VAT paid on the purchase of touring coaches that are no more than 2 years old and are within specified dimensions.
It must also be noted that where a good or service is exempt from VAT, such as passenger transport services, this reduces the cost of that service for both the providers and the user of the service.
