Dáil Éireann Debate, Wednesday - 5 February 2025
265. Deputy Erin McGreehan asked the Minister for Finance the number of categories currently subject to each of the reduced VAT rates of 9% and 13.5%; the number of additional categories which may become subject to either of the reduced VAT rates on foot of proposals in the Programme for Government; and whether there is a limit on the number of categories which may be subject to each, or both, of the two reduced VAT rates. [2718/25]
View answerThe 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 EU VAT Directive provides that all goods and services are liable to VAT at the standard rate, unless they fall within categories of goods and services specified in Annex III of the VAT Directive, in respect of which Member States may apply a lower rate of VAT. Following revisions in 2022 Annex III has thirty three categories to which a reduced rate may be applied. Member States may apply a reduced rate to a maximum of twenty four of these categories. Ireland currently applies a reduced rate to twenty of these categories. Three of these categories currently have a 9% VAT rate applied.
Ireland maintains two reduced rates, a reduced rate of 13.5% and a second reduced rate of 9%. The Directive allows any of these categories to have any reduced rate applied. A reduction from a 13.5% VAT rate to a 9% VAT rate would not affect the limit of 24 categories to which a reduced VAT rate can apply.
The Directive also allows for a Member State’s historic VAT treatment to be maintained under certain strict conditions outside of Annex III. One of the conditions applied in these cases is that the rate applied under the historic arrangement is ‘parked’, which means that EU law prohibits it being reduced below 12%.
As the Deputy will be aware, in making any decision in relation to VAT rates or other taxation measures, the Government must balance the costs of the measures in question against their impact and the overall budgetary framework. All decisions in relation to changes to VAT rates, including the full scope of any reduction, will therefore be made in line with this framework.
