Dáil Éireann Debate, Thursday - 27 September 2012
76. Deputy Brendan Griffin asked the Minister for Finance if he will permit tour operators to claim back VAT on fuel costs to allow them to be as competitive as tour operators from Northern Ireland operating here; and if he will make a statement on the matter. [41198/12]
Amharc ar fhreagraThe transport of passengers and their accompanying baggage is exempt from VAT under paragraph 14(3) of Schedule 1 to the Value-Added Tax Consolidation Act 2010. A person who provides a bus tour service does not register for VAT and cannot recover VAT incurred on goods and services used for the purposes of that tour service, including fuel costs. In the UK, passenger transport is zero rated for VAT purposes, which means passenger transport providers do not charge VAT on the services they supply but, unlike in Ireland, can recover VAT incurred on the goods and services used as part of that service, including the fuel. Irish, and UK, VAT law must comply with the EU VAT Directive. As passenger transport was exempt in Ireland on 1 January 1978, it is possible under the VAT Directive to continue to apply that exemption. For the same historic reasons the UK are entitled to continue to apply a zero rate to passenger transport services. It is not possible under EU law for Ireland to apply a zero rate to such services.
However, UK passenger transport operators who establish their businesses in Ireland are subject to the same VAT rules as Irish operators. They are exempt from VAT and not zero-rated, and as such not entitled to deductibility in respect of VAT incurred on items such as fuel. In addition, UK passenger transport operators who are not established in the State are not entitled to any refund of VAT incurred in this State for the purposes of carrying out passenger transport activities.
