Dáil Éireann Debate, Thursday - 16 June 2022
20. Deputy Pádraig O'Sullivan asked the Minister for Finance if he plans to engage with his counterparts in the European Union with a view to revising the VAT treatment of home heating oil in Ireland similar to the recent VAT reduction in electricity and gas; and if he will make a statement on the matter. [31282/22]
Amharc ar fhreagraAs the Deputy will be aware, Minister Donohoe has already engaged with Commissioner Gentiloni on this issue. The Deputy should note that in his correspondence the Minister outlined the various actions he had taken to mitigate the cost of energy for households and businesses in Budget 2022, as well as the additional €505m support package introduced in February. He also outlined the further package of measures in March which provided for a reduction in excise duty on petrol of 20 cent; diesel 15 cent and Marked Gas Oil of 2 cent.
The Minister acknowledged the importance of the Energy Tax and VAT Directives, in particular the framework they provide for a consistent application of these taxes across all Member States. However, in the context of the significant increases in energy prices, he outlined the limitations of the recent changes to Annex III of the VAT Directive given that reduced rates may only be applied to gas and electricity, and therefore other fuels remain outside the scope of the reduced rates. In this context the Minister asked the Commission to consider allowing Member States to respond to the crisis with greater flexibility than is permitted under the Directives.
On 23 April, Commissioner Gentiloni wrote to all Finance Ministers in relation to the energy crisis, responding to points Minister Donohoe and his European counterparts have raised. The Commissioner highlighted the current flexibility provided by EU Directives, including the newly agreed amendment to VAT rates. The Commissioner indicated that the Commission does not envisage any further revisions of the EU taxation framework to respond to the current crisis.
Minister Donohoe and his officials will continue to engage with the Commission and with their European counterparts to seek the maximum degree of flexibility for Member States to respond to the current energy crisis. It should be noted that any change to the VAT Directive would require unanimity from all Member States and that the recent amendment to VAT rates within the Directive was the result of four years of negotiations.
