Dáil Éireann Debate, Tuesday - 14 July 2020
296. Deputy Brendan Griffin asked the Minister for Finance his options in respect of a reduction of the 13% VAT rate currently applicable to the hospitality sector; if he cannot lower this rate below 5%; if that is the case, the reason therefor; if he has had contact with the European Commission regarding potential VAT reductions in the economy; and if he will make a statement on the matter. [15165/20]
Amharc ar fhreagraI am advised by Revenue that the VAT rating of goods and services is subject to the requirements of EU VAT law, with which Irish VAT law must comply. In general, the reduced rate of VAT (13.5%) currently applies to accommodation, certain recreational activities and supplies of food and drink in restaurants, excluding alcohol and soft drinks.
Under EU VAT law, Member States may only have two reduced rates which cannot be higher than 15% and no lower than 5%. These lower rates can only be applied to a prescribed list of services in Annex III of the VAT Directive 2006/112/EC. Ireland currently has two reduced rates, 9% and 13.5%. In order to introduce a new reduced rate, one of the current reduced rates would have to be removed. In general, the VAT rate on accommodation, certain recreational services, such as amusement parks, fairgrounds, cinemas, etc., can be reduced to a rate no lower than 5%. The provision of food and drink in restaurants can also be reduced to a rate no lower than 5%, with the possibility to excluding alcohol and soft drinks.
Ireland, in line with the VAT Directive, also maintains several standstill provisions and derogations that allows it to maintain reduced rates, zero rates and exemptions to certain supplies for historical reasons. These standstill provisions and derogations cannot be extended.
