The application of VAT in these cases is governed by EU law. Nursing home services provided by the HSE are not, as the Deputy suggests, subject to the zero VAT rate. The position is that homecare services provided directly by the Health Service Executive are exempt from VAT, as public bodies are not regarded as taxable persons. This means that they do not charge VAT on the services they provide and cannot recover VAT incurred on their input costs.
Under the Sixth VAT Directive Member States may retain the zero rates on goods and services, which were in place on 1 January 1991, but cannot extend the zero rate to new goods and services. The provision of homecare services was not zero rated on 1 January 1991 and cannot therefore be zero rated. Accordingly, private providers of homecare services must charge VAT at the appropriate rate of up to 21%.
I am informed by the Revenue Commissioners that VAT returns are not compiled in a manner which would allow the yield from particular goods or services to be identified. Therefore, the amount of VAT collected in respect of homecare services cannot be readily identified from the overall VAT yield.
My Department is examining in consultation with the Department of Health and Children the scope within the relevant EU Directives to exempt the provision of such services from VAT in the future.