Dáil Éireann Debate, Thursday - 5 October 2023
94. Deputy Brendan Griffin asked the Minister for Finance if he will reduce the taxes applied to building activity and materials in respect of residential construction to reduce the cost of building a dwelling; and if he will make a statement on the matter. [43056/23]
View answerAs the Deputy will be aware, it is a longstanding practice that the Minister for Finance does not comment, in advance of the Budget, on any tax matters that might be the subject of Budget decisions.
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 (currently 23% in Ireland), 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.
Ireland already applies a reduced rate of 13.5% to all construction, including residential construction.
It should be noted that while construction materials for the most part have the standard rate of VAT applied they have an effective rate of 13.5% VAT due to the 'two-thirds rule' which applies to construction. This rule means that if the cost of the goods used in carrying out work does not exceed two-thirds of the total price, the rate which applies to the service then applies to the entire transaction.
