Dáil Éireann Debate, Tuesday - 10 February 2026
195. Deputy Pa Daly asked the Tánaiste and Minister for Finance if he has engaged at an EU level to discuss allowing member states to set the VAT on electricity at 0% under the EU VAT Directives as a means to assist with the transition to net zero; and if he will make a statement on the matter. [10032/26]
Amharc ar fhreagraAs the Deputy will be aware the EU VAT Directive which Irish VAT law must comply generally holds that outside of certain historical derogations all goods and services are liable for VAT at the standard rate unless they are included in a schedule under Annex III of the Directive. For those goods and services within Annex III a specified number may have a zero rate of VAT applied to them.
After changes to the Directive in 2022, it became possible to apply a reduced or second reduced rate of VAT to electricity, with the temporary 9% VAT rate on electricity and gas being extended until end 2030 in Budget 2026. It is not possible to apply a zero rate of VAT to electricity.
As the Deputy will be aware any changes in relation to the VAT Directive require unanimity. The last revision to Annex III of the VAT Directive was agreed to in April 2022 after a four-year negotiation process. No further change to Annex III is expected at this time.
