Dáil Éireann Debate, Thursday - 11 November 2021
239. Deputy Catherine Murphy asked the Minister for Finance if he has considered reviewing VAT exemptions (details supplied) for the driving education sector in the context of the Value-Added Tax Consolidation Act 2010. [55404/21]
View answerThe VAT rating of goods and services is subject to the requirements of EU VAT law, 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 supply of driving lessons is not listed in Annex III and therefore would, in general across the EU, be subject to the standard rate. However, the Directive allows that a Member State may maintain a historic VAT treatment under certain conditions and, on that basis, Ireland has retained its application of the reduced rate of VAT, currently 13.5%, to the supply of general driving lessons.
There is no provision in the VAT Directive to exempt the supply of general driving lessons.
The Directive does provide that the supply of vocational training services is exempt from VAT. This exemption applies to training directly related to a trade or profession, and such training includes a course of driving instruction in vehicles designed to carry 1.5 tonnes of goods or more, or 9 persons or more (including the driver).
For training to be exempt from VAT, each of the following conditions must be met:
- the training must be vocational in nature, that is, it must be directed towards an occupation and its associated skills.
- it must be provided to improve the vocational rather than the personal skills of the trainee.
- the vocational skills that the trainee acquires can be transferable from one employment to another, or to self-employment.
- the training will generally be provided by means of a structured programme, have concise aims, objectives and clear anticipated outcomes; and
- there should be a clear trainee/trainer relationship between the student and the teacher or instructor.
Where any of the above conditions is not met, or the course is primarily directed towards personal development, or undertaken for recreational purposes, the course will be subject to VAT at the appropriate rate.
The Irish VAT law provisions in relation to general driving lessons and in relation to vocational training (including in driving) are fully in keeping with the provisions of the EU VAT rules.
