Dáil Éireann Debate, Tuesday - 12 February 2013
200. Deputy Brendan Griffin asked the Minister for Finance if he will consider measures to assist the construction industry by reducing VAT on building materials for home improvement schemes being carried out by registered contractors; and if he will make a statement on the matter. [6590/13]
Amharc ar fhreagraI would point out that a reduced VAT rate already applies to many building materials used for home improvement. While the supply of building materials is in general subject to VAT at the standard rate of 23%, Ireland applies a reduced rate of 13.5% to the supply of ready-to-pour concrete and certain concrete blocks. In addition, where a building contractor carries out home improvements and the materials cost does not exceed two-thirds of the cost of the improvements then the reduced rate of 13.5% applies to the total building service. A consequence of this is that a VAT registered building contractor will generally be entitled to recover VAT at the 23% standard rate on most building materials purchased while the contractor is only liable to charge VAT at the 13.5% reduced rate on the supply to the home owner.
The VAT rating of goods is subject to the requirements of the EU VAT Directive with which Irish VAT law must comply. The application of the 13.5% rate to construction work and building materials is the subject of a derogation from EU VAT law, where most other EU Member States apply higher rates of VAT to building materials. In this context, home improvement works are already incentivised through the VAT system.
