Dáil Éireann Debate, Tuesday - 26 May 2026
159. Deputy Pa Daly asked the Tánaiste and Minister for Finance if he has considered reducing the VAT on electricity to 0% for households; if he has raised the changes that would be required to the EUs VAT directive with other EU member states; if he will make this a priority during Ireland's EU Presidency in order to reduce the cost of energy; and if he will make a statement on the matter. [39599/26]
View answerThe position remains as outlined to Deputies Daly and Doherty on 21 April 2026.
As I noted at the time, the EU VAT Directive, which Irish VAT law must comply, generally holds that all goods and services are liable for VAT at the standard rate which must be set at a minimum of 15%. If a good or service is listed under Annex III of the VAT Directive, a reduced or zero VAT rate may be applied.
It is important to note that Ireland applies more reduced and zero rates than every other Member State. Some Member States prefer not to introduce greater variability in VAT across the EU.
The last amendments to Annex III were agreed in 2022 after four years of negotiation. However, electricity was not included in these amendments and therefore the lowest rate that may be applied to VAT in Ireland is the second reduced rate of 9%. The application of the 9% VAT rate on supplies of gas and electricity was introduced from 1 May 2022. This measure was extended on a number of occasions, most recently in Budget 2026 when the measure was extended to 31 December 2030. The total estimated cost of the reduced VAT rate for gas and electricity from its introduction on 1 May 2022 to the end of this year will be over €1 billion.
At present there are no proposals at EU level to re-open the VAT Directive regarding zero rates for electricity, however, officials in my Department and across Government continue to engage with their European counterparts and with the European Commission in relation to the ongoing energy crisis. As the Deputy will be aware the European Commission is working with Member States on the EU wide response to this crisis.
The Government is acutely aware of the difficulties faced by households and businesses as a result of the ongoing crisis in the Middle East.
In addition to significant reductions in the rates of mineral oil taxes, there has been an increase in the Fuel Allowance rate to €38 per week with an expansion in the eligibility rules, meaning many more people now qualify.
Additional protections are also in place for customers experiencing difficulties in paying their bills. Minister O’Brien has engaged with the four biggest energy retailers in recent months to ensure that hardship funds and focused measures are in place for any customers who find themselves in difficulty.
The National Energy Affordability Taskforce is also preparing an Energy Affordability Action Plan that will be completed in Q3 of this year.
Finally, as the Deputy may be aware, if there were any proposed changes to the VAT Directive they would need to be agreed by unanimity.
