Clare Daly
Question:227. Deputy Clare Daly asked the Minister for Finance the reason utility companies are instructed to levy VAT on the PSO charge and the legislative basis for this instruction. [46370/14]
View answerTuesday, 2 December 2014
Questions (227)
Written answers
With regard to the application of VAT on electricity bills supplied by utility companies, in accordance with section 37(1) of the Value-Added Tax Consolidation Act 2010, the amount on which VAT is chargeable is the total consideration receivable by the supplier, "including all taxes, commissions, costs and charges whatsoever", but not including the VAT itself. This reflects EU VAT law, with which Irish tax law must comply. In this regard, Article 78 of the EU VAT Directive provides that the taxable amount shall include "taxes, duties, levies and charges, excluding the VAT itself".
In this respect, where the charge for a supply of service, such as an electricity bill, includes the Public Service Obligation levy, VAT law dictates that VAT should be calculated on the PSO levy element of the charge as well as the charge for the service. The same situation applies in the case of other excises, including for example excises on petrol, auto-diesel, tobacco and alcohol products.