Dáil Éireann Debate, Wednesday - 20 March 2024
256. Deputy Jim O'Callaghan asked the Minister for Finance whether services such as yoga, pilates, boxercise and spinning are being afforded a financial advantage over activities such as martial arts and gymnastics, which are required to charge VAT. [12701/24]
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.
On this basis, martial arts or gymnastic classes have been liable to VAT at the standard rate, currently 23%. Services consisting of the care of the human body, including services supplied in the course of a health studio business or similar business, such as a yoga, pilates, boxercise and spinning, were previously liable to VAT at the reduced rate, currently 13.5%, on the basis of a historical derogation.
Amendments were made to the EU VAT Directive in 2022 which allow a Member State to apply a reduced rate of VAT to certain activities, including the supply of sport or physical exercise classes. The Deputy should note while I did give the matter some consideration, no decision was made in Budget 2024 to reduce the VAT rate on sports and fitness classes.
The Deputy should note that when sports or fitness classes are provided by companies or sole traders who are not registered for VAT because they operate below the VAT registration threshold no VAT is charged.
Finally, as with other VAT rate reductions it should be noted that while the VAT charged must always be correct a company can increase the base price of the service so that the final consumer does not benefit from such a reduction.
