Tax Code

Wednesday, 5 February 2025

Ceisteanna (251, 257, 292)

Liam Quaide

Ceist:

251. Deputy Liam Quaide asked the Minister for Finance his plans to apply a reduced rate of VAT to bottled water; and if he will make a statement on the matter. [2255/25]

Amharc ar fhreagra

257. Deputy Pat Buckley asked the Minister for Finance if he will arrange for Revenue to issue a VAT refund to individuals who are living with a 'boil water notice' (details supplied), using bottled water that they are forced to purchase; and if he will make a statement on the matter. [2396/25]

Amharc ar fhreagra

Noel McCarthy

Ceist:

292. Deputy Noel McCarthy asked the Minister for Finance if he will consider the establishment of a VAT refund on the purchase of bottled water for domestic households who continue to be affected by prolonged boil water notices, possibly by notifying the Revenue Commissioners directly of the affected Eircode; and if he will make a statement on the matter. [3089/25]

Amharc ar fhreagra

Freagraí scríofa

Minister for Finance

I propose to take Questions Nos. 251, 257 and 292 together.

The VAT rating of goods and services is subject to the requirements of the EU VAT Directive 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 those listed in Annex III, in respect of which Member States may apply a lower rate.

Ireland applies the standard rate of VAT, which is currently 23%, to the supply of drinks/beverages generally, including bottled water.

Milk and milk alternative drinks are subject to the zero rate of VAT, as are tea and coffee in non-drinkable form (for example, tea bags or coffee granules). In certain circumstances, the reduced rate of VAT (13.5%) can apply to the supply of tea and coffee (supplied in drinkable form), and fruit juices where they are supplied in the course of a catering or restaurant service.

Any suggestion for extending the application of a reduced VAT rate to bottled water would need to be considered carefully having regard to a range of factors including the impact on Exchequer revenues, any potential market distortions and fiscal neutrality concerns, the environmental impact of increased use of plastic, and the practical concerns that it would be difficult to administer and could increase the scope for manipulation of the VAT system and opportunities for tax avoidance.

It should be noted that as with any VAT reduction there is no guarantee that VAT reductions would be passed to the consumer.

As regards the suggestion to introduce an arrangement to refund VAT on bottled water incurred by consumers living within certain Eircodes, such a measure would not be compatible with the EU VAT Directive. Under EU law, generally only businesses that are registered for VAT and charge VAT on their supplies of goods and services are entitled to reclaim the VAT incurred on their business costs. There are restrictions, though, in relation to certain items, including drinks, so that these cannot be reclaimed where the item is purchased for use of the business owner, his or her employees or agents.