Vol. 529 No. 4
145 Mr. Sargent asked the Minister for Finance if he will waive the 20% VAT on the purchase of biocycle units and the 12% VAT on the installation of such a unit to encourage development which minimises the detrimental affect on ground water. [3106/01]
The position is governed by EU VAT law with which Irish VAT law must comply. Member states can retain the zero rating provisions which were in existence on 1 January 1991, but cannot introduce any new ones. Therefore, it is not possible for me to zero rate the supply or installation of biocycle units.
In addition, under EU VAT law there are certain options for applying a reduced rate to certain goods and services, however, there is no mechanism under EU VAT law for Ireland which would allow me to apply a reduced rate of VAT on biocycle units. The sale of these units is chargeable in Ireland at the standard rate of VAT which in my recent budget I reduced by 1% to 20% which should help reduce the cost of them.
However, the supply and installation of biocycle units by a contractor would be taxable at 12.5% if the cost excluding VAT to the contractor in carrying out the work exceeds two thirds of the total cost to the contractor, exclusive of VAT. There is no rate of VAT of 12% in effect in Ireland.
