Dáil Éireann Debate, Tuesday - 4 October 2022
232. Deputy Richard Boyd Barrett asked the Minister for Finance the reason that karate classes for children pay a higher VAT rate than other classes such as yoga, fitness classes and pilates; and if he will make a statement on the matter. [48468/22]
View answerI am advised by Revenue that 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 the 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. 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 is also permitted to retain some historic VAT arrangements, under strict conditions.
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 liable to VAT at 13.5% on the basis of a historical derogation. In the absence of this derogation, these business would pay the standard 23% rate of VAT. Unfortunately, karate classes do not fall within the aforementioned derogation, thus explaining why they pay a higher rate of VAT.
