Dáil Éireann Debate, Tuesday - 22 March 2016
74. Deputy Brendan Griffin asked the Minister for Finance if he will now introduce a 9% rate of value added tax for residential construction activity given the shortage of houses and the number of unemployed construction workers; and if he will make a statement on the matter. [5032/16]
Amharc ar fhreagraVAT is governed by the EU VAT Directive, with which Irish VAT law must comply. Construction services already avail of the reduced VAT rate of 13.5% while most economic activity is subject to the standard VAT rate of 23%. Ireland has historically applied the 13.5% reduced rate of VAT to all construction services under a derogation from the EU VAT Directive. This derogation is only permissible where the VAT rate applying is 12% or greater. Accordingly, it is not legally possible to introduce a 9% rate of VAT on non-residential construction services. Having said that, it is possible to apply the 9% VAT rate to the construction of residential properties, but as I have said before this would involve having two separate VAT rates applying to construction services, would be difficult to administer and could lead to underpayment of VAT. Accordingly, I have no plans to apply different rates to construction services at this time.
