Dáil Éireann Debate, Wednesday - 3 June 2020
72. Deputy Carol Nolan asked the Minister for Finance if he will consider the reclassification of VAT status to harmonise the VAT system on the island of Ireland specifically with respect to the coach and bus sector (details supplied); and if he will make a statement on the matter. [8727/20]
Amharc ar fhreagra76. Deputy Sean Sherlock asked the Minister for Finance if he has given consideration to the reclassification of VAT status to harmonise the VAT system on the island of Ireland for the bus and coach sector. [8791/20]
Amharc ar fhreagra99. Deputy Brendan Smith asked the Minister for Finance if he will give urgent consideration to the requests of an association (details supplied) regarding the urgent need to provide support to a sector due to the severe difficulties facing the industry as a result of the Covid-19 pandemic; and if he will make a statement on the matter. [9274/20]
Amharc ar fhreagra102. Deputy Holly Cairns asked the Minister for Finance his views on reclassifying the VAT status for the bus and coach sector to harmonise the VAT systems in view of the fact that operators in Northern Ireland have an advantage in their ability to claim VAT back on expenditure which the operators here are not able to do. [9389/20]
Amharc ar fhreagraI propose to take Questions Nos. 72, 76, 99 and 102 together.
I am advised by Revenue that the VAT rating of goods and services is subject to EU VAT law, with which Irish VAT law must comply. In general, the VAT Directive provides that all goods and services are liable to VAT at the standard rate, currently 23% in Ireland, unless they fall within categories of goods and services specified in the Directive, in respect of which Member States may apply a lower rate or exemption from VAT. In addition, the Directive allows for historic VAT treatment to be maintained under certain conditions and Ireland has retained the application of VAT exemption to the transport of passengers and their accompanying baggage. This means that the supplier does not register for VAT, does not charge VAT on the supply of their services and has no VAT recovery entitlement on costs where such costs are used for the exempt supply of passenger transport.
Ireland may continue to apply the VAT exemption on the supply of domestic passenger transport as governed by Article 371 of the VAT Directive; however, it cannot change the conditions under which the exemption was granted. In accordance with the Directive, a reduced rate of VAT (Ireland currently has two reduced VAT rates, 9% and 13.5%) could be introduced to the supply of passenger transport in place of the exemption that currently applies; this would give the transport operator deductibility in relation to VAT on their business inputs but would involve charging passengers VAT on their fares. Under the Directive it is not possible to apply the zero rate in Ireland to these services, as their supply was never zero rated in the past.
In the UK, where these services were previously zero rated, the zero rate of VAT continues to apply to the supply of passenger transport, except for a taxi service which is standard rated, and suppliers established in the UK have an entitlement to deductibility on the costs relating to the supply of these services where the place of supply is the UK.
I would point out that there are reliefs from VAT available to passenger transport operators, whose businesses are established in this State, as follows:
- the Value Added Tax (Refund of Tax) (Touring Coaches) Order of 2012 provides for a refund of VAT on the cost of acquiring “qualifying vehicles” used for the carriage of tourists under contracts for group transport; and
- provisions within Section 59 of the VAT Consolidation Act 2010, which allow a person established in this State to claim deductibility in respect of input costs incurred in relation to the transport of passengers outside this State.
