Barry Cowen
Ceist:257. Deputy Barry Cowen asked the Minister for Finance the cost estimates for introducing a special 9% VAT rate on residential construction in budget 2018. [27319/17]
Amharc ar fhreagraTuesday, 20 June 2017
Ceisteanna (257, 287, 288)
Barry Cowen
Ceist:287. Deputy Barry Cowen asked the Minister for Finance his views on introducing a 0% VAT rate on all renovations or alterations of empty residential premises as in the UK (details supplied). [27816/17]
Amharc ar fhreagraBarry Cowen
Ceist:288. Deputy Barry Cowen asked the Minister for Finance the cost of introducing a 0% VAT rate on all renovations or alterations of empty residential premises as in the UK (details supplied). [27818/17]
Amharc ar fhreagraFreagraí scríofa
I propose to take Questions Nos. 257, 287 and 288 together.
The VAT rating of goods and services is subject to EU VAT law, primarily Council Directive 2006/112/EC, with which Irish VAT law must comply. The VAT Directive provides that Member States must apply a standard VAT rate at no lower than 15% and may apply two reduced rates between 5% and 15% to certain goods and services as listed in Annex III of the Directive. In addition, the Directive allows for historic VAT treatment to be maintained under set conditions. This allows for the continuation of the application of a zero rate or a rate less than 5% to goods or services where the rate applied on and from 1 January 1991. The zero rate of VAT cannot be applied to any new item. Similarly, the VAT Directive allows Member States to continue to exempt certain suppliers which were exempt on 1 January 1978 but the exemption cannot be applied to any new items.
As Ireland did not apply a zero rate of VAT to supplies of residential construction, or the renovation and alteration of empty residential premises on and from 1 January 1991, it is not legally possible to introduce a zero rate for these services. The UK can apply a zero VAT rate to the renovation and alteration of empty residential premises as they did so on and from 1 January 1991.
With regard to applying a 9% VAT rate to residential construction, I am advised by Revenue that it is tentatively estimated that introducing a 9% VAT rate specific to residential construction in Budget 2018 could cost in the region of €240m. This is based on the extrapolation of projections from a number of data sources, including residential completions, residential construction projects under current development and the average selling price of new residential homes.