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Value Added Tax

Dáil Éireann Debate, Tuesday - 21 July 2020

Tuesday, 21 July 2020

Questions (189)

Steven Matthews


189. Deputy Steven Matthews asked the Minister for Finance if his attention has been drawn to the campaign by yoga studio owners about their existing VAT rate; and his views on the matter. [17330/20]

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Written answers (Question to Finance)

The VAT rating of goods and services is subject to the requirements of the EU VAT Directive, with which Irish VAT law must comply. In general, the VAT Directive provides that all goods and services are liable to VAT at the standard rate unless they fall within Annex III of the Directive, in respect of which Member States may apply either one or two reduced rates of VAT. The “use of sporting facilities” is specifically listed in Annex III which therefore allows Ireland to apply the second reduced rate, currently 9%.

Services consisting of the care of the human body supplied in the course of a health studio business or similar business, such as a yoga studio, are not listed in Annex III and therefore would in general be subject to the standard rate. However, the Directive allows for historic VAT treatment to be maintained under certain conditions and Ireland has retained the application of the reduced rate of VAT, currently 13.5%, to the services of yoga studios. This is known as a ‘parked rate’ and the continuation of this reduced rate application is conditional on the rate being no less than 12%. Therefore, there is no discretion under the Directive to apply the 9% rate to these services.