Dáil Éireann Debate, Tuesday - 20 June 2023
246. Deputy Neasa Hourigan asked the Minister for Finance whether the reduced VAT rate of 5% has been applied to all 24 points of goods and services, as per the VAT Directive, to date; and if he will make a statement on the matter. [29301/23]
View answer248. Deputy Neasa Hourigan asked the Minister for Finance whether the reduced rate of 0% VAT has been applied to a maximum of seven items as per the VAT Directive to date; and if he will make a statement on the matter. [29303/23]
View answerI propose to take Questions Nos. 246 and 248 together.
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 from VAT. Within its rates structure, the EU VAT Directive also allows 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.
In this regard, Annex III of the VAT Directive lists those goods and services to which a reduced rate may be applied. Following changes made in April 2022, the 24 items of Annex III have been expanded to 33. Some of the original categories have also been amended. In addition, the VAT Directive now includes two new limitations on the use of Annex III by Member States. The first limits Member States to using a maximum of 7 categories to which a zero or super-reduced rate of VAT (rates lower than 5%) can be applied. The second limits Member States to using a maximum of 24 categories to which a reduced rate can be applied.
Ireland applies a zero rate to 7 out of 7 permitted categories, and a reduced rate to 19 out of 24 permitted categories.
