The 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 EU VAT Directive provides that all goods and services are liable to VAT at the standard rate, unless they fall within categories of goods and services specified in Annex III of the VAT Directive, in respect of which Member States may apply a lower rate of VAT. Within its rates structure, the EU VAT Directive also allows for historic VAT treatment to be maintained under certain conditions on certain goods and services not provided for in Annex III. Currently Ireland has a standard VAT rate of 23% and two reduced rates of 13.5% and 9%. Ireland also holds a number of derogations, under which it is permitted to retain some historic VAT arrangements, under strict conditions.
Under the EU VAT Directive and Irish VAT legislation the supply of motor fuel, specifically petrol and diesel, is liable to VAT at the standard rate, currently 23%. There is no discretion under the Directive for Ireland to remove these supplies from the standard rate.