Dáil Éireann Debate, Tuesday - 29 April 2025
595. Deputy Paula Butterly asked the Minister for Finance if he will consider applying a reduced VAT rate to hydrotreated vegetable oil biofuel when used for agricultural purposes, in recognition of the need to support the farming community in reducing carbon emissions and transitioning to more sustainable fuel alternatives; and if he will make a statement on the matter. [20223/25]
View answerThe VAT rating of goods and services is subject to EU VAT law, with which Irish VAT law is obliged to 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 Annex III of the Directive, in respect of which Member States may apply a lower rate of VAT.
Motor fuels such as petrol, including bio-ethanol petrol blends, and auto-diesel are not included in the categories of goods and services on which the EU Directive allows a lower rate of VAT, and so they are liable to VAT at the standard rate, currently 23%. Biofuel and non-food vegetable oils, such as Hydrotreated/Hydrogenated Vegetable Oil (HVO), used to fuel vehicles are similarly liable to VAT at the standard rate and Ireland has no discretion in this regard.
However, the Directive does allow a Member State to maintain historic arrangements subject to certain strict conditions and, on this basis, Ireland applies its reduced rate of 13.5% to HVO used as domestic or industrial heating fuel.
