Dáil Éireann Debate, Tuesday - 5 July 2022
177. Deputy Eoin Ó Broin asked the Minister for Finance the current rate of VAT on construction for refurbishment of vacant properties; and if there are any legal impediments to lowering this rate of VAT for refurbishment of vacant properties when such refurbishments meet other Government policy objectives, including those set out in the climate action plan's town centre first policy. [35788/22]
Amharc ar fhreagraThe Deputy should note that the VAT rating of goods and services is subject to EU VAT law, with which Irish VAT law must comply. In general, the Directive provides that all goods and services are liable to VAT at the standard rate unless they fall within Annex III of the Directive, in respect of which Member States may apply either one or two reduced rates of VAT. Ireland currently operates two reduced rates of VAT, 13.5% and 9%, as permitted by the Directive.
Under the EU VAT Directive the supply of construction services is liable to VAT at the standard rate generally across the EU but Ireland applies a 13.5% reduced rate of VAT to all construction services under a derogation from the EU VAT Directive, subject to strict restrictions.
Construction services that consist of the “renovation and repairing of private dwellings, excluding material which account for a significant part of the value of the service supplied” can benefit from the reduced rate of VAT, currently 13.5%. This means that where a building contractor carries out home improvements and the material cost does not exceed two-thirds of the costs of the improvements then the reduced rate of 13.5% applies to the total construction service.
It is not possible for Ireland to apply the 9% reduced VAT rate solely to the refurbishment of vacant properties on a restricted basis.
