Dáil Éireann Debate, Wednesday - 9 October 2024
37. Deputy Claire Kerrane asked the Minister for Finance if he will consider extending the lower rate of VAT on gas and electricity to natively produced renewable and sustainable fuel, where the proceeds go back into the local economy, given that 70% is sourced from abroad; and if he will make a statement on the matter. [40343/24]
Amharc ar fhreagra45. Deputy Seán Canney asked the Minister for Finance if he will apply a lower rate of VAT to firewood, similar to that of gas and electricity as it is a sustainable, renewable fuel which benefits the local forest owners where the material is sourced; if he is aware that this will support the Irish economy and supply heating material for vulnerable citizens who are reliant on fireplaces and stoves; and if he will make a statement on the matter. [40426/24]
Amharc ar fhreagra48. Deputy Michael Fitzmaurice asked the Minister for Finance to consider reducing the VAT rate for natively produced renewable fuel, such as firewood, in line with the decision to apply a lower rate of VAT on gas and electricity; and if he will make a statement on the matter. [40430/24]
Amharc ar fhreagraI propose to take Questions Nos. 37, 45 and 48 together.
The 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. Currently, Ireland has a standard rate of 23% and two reduced rates of 13.5% and 9%.
A reduced rate of 13.5% already applies to firewood and other solid fuels.
No decision was made in Budget 2025 to apply a further reduced rate of 9% to firewood. If such a measure was proposed it would form part of the normal Budget and Finance Bill process where the cost and impact could be considered.
The Deputies should note that as with other VAT rate reductions, while the VAT charged must always be correct a company can increase the base price of a product so that the final consumer does not benefit from the VAT reduction.
Finally, I note the suggestion that lower VAT rates be applied to natively produced renewable and sustainable fuel. In the application of VAT rates, the Directive does not provide discretion for Member States to consider the degree to which goods or services are sourced domestically or are sourced from other countries, nor does it allow different VAT rates to apply to goods depending on whether they are produced here or are brought into the State from elsewhere.
