Dáil Éireann Debate, Wednesday - 15 June 2016
83. Deputy Michael McGrath asked the Minister for Finance if there is flexibility in terms of the value added tax charged to the end consumer in the case where a retailer is selling age appropriate clothes for children but of a size that is beyond the threshold for zero rating; the clothes size thresholds that apply for zero rating; and if he will make a statement on the matter. [16161/16]
View answerThe VAT rating of goods and services is subject to the requirements of EU VAT law with which Irish VAT law must comply. The zero rate of VAT applies to the supply of articles of children's personal clothing not exceeding the size appropriate to children of average build of 10 years of age. Certain items of children's clothing are excluded from the application of the zero rate and remain taxable at the standard rate of VAT.
In the practical administration of the measure, the zero rating applies to children's clothing of sizes up to and including 32" chest or 26" waist. Where the size thresholds are exceeded, the zero rating cannot be applied to the clothes. These sizes were determined in 1984 after consultation with clothing and footwear trade interests at both manufacturing and distribution levels.
Ireland's application of the zero rate of VAT to children's clothing derives from the derogation under Article 110 of the EU VAT Directive. Under that provision Ireland may retain the zero rate on goods and services which were in place on 1 January 1991. EU VAT law precludes Ireland from extending the zero rate to new goods or services as this would increase the divergence of VAT rates among the Member States. It is not therefore possible to extend the application of the zero rate by raising the age limit of children to whom the zero rate could apply in respect of articles of clothing.
However, if there were satisfactory evidence that average clothing sizes for 10 year olds has changed since 1984, then Revenue could review the matter and adjust them if warranted.
