Dáil Éireann Debate, Tuesday - 15 February 2022
296. Deputy Louise O'Reilly asked the Minister for Finance if the new European Union VAT rules agreed in December 2021 at European Council level will impact on Ireland's existing derogations from European Union VAT rules. [7983/22]
View answerAs the Deputy will be aware, 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.
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 a range of services under what is known as a 'parked rate'. The continuation of these parked rates is conditional on the rate being no less than 12%.
In addition, Ireland maintains a zero VAT rate on certain items under a derogation from EU VAT law which allows Member States to retain certain zero rates for goods and services which were expressly covered in their national VAT legislation on 1 January 1991.
Ireland’s current application of VAT rates has for the most part been preserved through the retention of historical derogations and exemptions or through the expansion of Annex III of the VAT Directive.
Officials in my Department will be reviewing the options now available to Ireland in setting VAT rates.
Future tax changes are generally taken in the context of the Budget. Deputies will be aware that my officials prepare a series of papers containing tax options for the Tax Strategy Group to be considered in the context of the budgetary process, alongside a wide range of submissions from various stakeholders and lobby groups.
