Dáil Éireann Debate, Tuesday - 22 September 2015
292. Deputy Finian McGrath asked the Minister for Finance his views on a matter (details supplied) regarding tax liability on certain medical appliances; his plans to address this matter; and if he will make a statement on the matter. [31121/15]
View answerI am advised by the Revenue Commissioners that EU VAT Directive (Council Directive 2006/112/EC), with which Irish VAT legislation must comply, generally provides that supplies of goods and services be chargeable to VAT at the standard rate but that lower rates are permitted in very limited circumstances. Ireland has applied a zero rate of VAT to the supply of hearing aids since 1981 and was permitted to retain the zero rate by Article 110 of the EU VAT Directive. The zero rate also applies to parts or accessories suitable for use solely or principally with the hearing aid.
Ireland has applied the reduced rate to the repair of movable goods, including hearing aids, since 1986 and was permitted to retain that reduced rate by Article 113 of the EU VAT Directive. The EU VAT Directive does not allow Irish VAT legislation to apply the zero rate of VAT to the repair of movable goods. I would point out that the two-thirds rule applies to a supply of services where the value of the goods included in the supply exceeds two thirds of the total price charged. For example, where the cost to the hearing aid repairer of zero rated materials, which includes hearing aid batteries, used in the repair of the aid is €120 exclusive of VAT and the total charge for the repair work is €150 then the zero rate, which is the rate applicable to the materials, is the rate that applies to the total charge of €150. The reduced rate of VAT of 13.5% applies to hearing aid repair services where the materials used do not exceed two thirds of the total charge.
