Tax Code

Tuesday, 26 April 2022

Questions (519)

Neale Richmond

Question:

519. Deputy Neale Richmond asked the Minister for Finance if he will consider reducing the VAT to 9% on home heating oil; and if he will make a statement on the matter. [20612/22]

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Written answers

The VAT rating of goods and services is subject to the requirements of EU VAT law with which Irish VAT law must comply. The VAT Directive obliges each Member State to have a standard rate of VAT and also allows that a Member State may choose to have no more than two reduced rates of VAT, which may be no less than 5%, and which may be applied to certain goods and services: any of those listed in Annex III of the Directive. Within this framework, Ireland currently applies a standard rate of 23% and two reduced rates of 13.5% and 9%.

The EU Directive permits derogations from the general rules to allow an individual Member State to continue certain historic tax treatments, such as the application of one of their reduced rates to particular goods and services which are not included in Annex III. Ireland, in line with the VAT Directive and by way of special derogation from the general rule, maintains several “standstill” provisions and derogations that allow us to maintain reduced rates to certain supplies for historical reasons. It is on this basis that Ireland applied its 13.5% reduced rate of VAT to the supply of fuel, gas, oil, and electricity services for both domestic and commercial use. The current 13.5% VAT rate applied to energy products is a ‘parked rate’, and cannot be reduced below 12%.

Following lengthy negotiations Annex III of the VAT Directive was expanded at the beginning of April to include gas and electricity. This means that Ireland can apply a reduced rate of 9% to these products. However it is not possible to apply a 9% rate of VAT to home heating oil as the reduced rate that applies to it is the result of a historical derogation. It should be noted that other Member States must apply their standard rate of VAT to this product.

Question No. 520 answered with Question No. 501.