Dáil Éireann Debate, Tuesday - 2 December 2025
161. Deputy Pearse Doherty asked the Tánaiste and Minister for Finance the estimated cost of extending the reduced VAT rate of 9% applied to electricity and gas to also cover home heating oil; and if he will make a statement on the matter. [67318/25]
Amharc ar fhreagraThe 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 the 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. While supplies of gas and electricity are included in Annex III, home heating oil is not, and therefore it would fall to be taxed by Member States at their standard rate of VAT.
However, the Directive also allows that a Member State may retain certain long-standing VAT arrangements that they had in place, subject to strict conditions including that the terms of the historic arrangement cannot be extended. On this basis, Ireland is also permitted to retain some historic VAT arrangements, under strict conditions. As one of the historic VAT arrangements, Ireland is permitted to retain its long-standing application of its reduced VAT rate – which is currently 13.5% – to the supply of fuel and oil for domestic and commercial use. In accordance with the Directive this arrangement is treated as a ‘parked’ rate, which means that it cannot be reduced below 12%. If Ireland were to cease the application of parked rate to these supplies, then under the terms of the Directive home heating oil would have to be subject to the standard rate of VAT, which in Ireland is currently 23%.
