Eoin Ó Broin
Ceist:396. Deputy Eoin Ó Broin asked the Minister for Finance the reason that the VAT rate for concrete is lower than that for building products generally. [43453/22]
Amharc ar fhreagraThursday, 8 September 2022
Ceisteanna (396)
Freagraí scríofa
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 unless they fall within Annex III of the VAT 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 VAT Directive.
Building materials are not included in the categories of goods and services on which the EU VAT Directive allows a lower rate of VAT or an exemption to be applied, and so they are liable to VAT at the standard rate. By way of special derogation from the general rule though, Ireland is permitted to continue its long-standing practice of applying a reduced rate, currently 13.5%, to the supply of ready-to-pour concrete and certain concrete blocks but there are restrictions on this derogation, including that the rate cannot be reduced below 12%. It is not possible under EU VAT law to extend the scope of the derogation to other building materials.
The Deputy will be aware that while builders and developers charge VAT on construction services at the reduced 13.5% rate, they are generally entitled to full recovery of any VAT incurred in the development of that property, including VAT at the standard rate on building materials used. Thus, even were it possible, a reduction in the rate of VAT on building materials would not reduce building costs.