Dáil Éireann Debate, Tuesday - 12 May 2026
467. Deputy Claire Kerrane asked the Tánaiste and Minister for Finance if he has carried out analysis on the tax take on HVO fuel as a result of higher prices; and if he will make a statement on the matter. [35056/26]
Amharc ar fhreagraAll liquid fuels, including biofuels such as hydrotreated/hydrogenated vegetable oil (HVO), are subject to Value-Added Tax (VAT), and to excise duty in the form of Mineral Oil Tax (MOT). As base costs for fuels increase, VAT, which is applied on an ad valoreum basis, also increases. However, as MOT applies volumetrically it is not impacted by fluctuations in base costs.
The VAT rating of goods and services is subject to EU VAT law, with which Irish VAT law is obliged to 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 Annex III of the Directive, in respect of which Member States may apply a lower rate of VAT.
Motor fuels such as petrol, including bio-ethanol petrol blends, and auto-diesel are not included in the categories of goods and services on which the EU Directive allows a lower rate of VAT, and so they are liable to VAT at the standard rate, currently 23%. Biofuel and non-food vegetable oils, such as HVO, used to fuel vehicles are similarly liable to VAT at the standard rate and Ireland has no discretion in this regard.
However, the Directive 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 permitted to retain its long-standing application of its reduced VAT rate – which is currently 13.5% – to the supply of HVO used for domestic or industrial heating fuel.
Regarding MOT, biofuels which are produced from biomass qualify for relief from the carbon component of MOT under section 100(5) of Finance Act 1999 (as amended). This means that biofuels, such as HVO, bio-ethanol and Fatty Acid Methyl Ester (FAME), are only subject to the non-carbon component of MOT. In the case of blended fuels, the biofuel relief applies to the biofuel portion. I am advised by Revenue that current effective MOT rates on biofuels, along with comparable MOT rates for fossil fuels, such as auto-diesel, are published on Revenue’s website at https://www.revenue.ie/en/companies-and-charities/excise-and-licences/mineral-oil-tax/liquid-substitute-fuels/index.aspx.
As biofuels are subject to MOT at the rate applicable to the fossil fuel they are used in place of, or blended with, they will have benefited from the recent MOT cuts on petrol, auto-diesel and Marked Gas Oil (MGO). For example, where a biofuel is used for non-propellant purposes, it attracts the MGO rate, minus the carbon component. As the non-carbon component of MOT on MGO has been reduced to zero since 15 April 2026, no liability currently arises on a biofuel used for non-propellant purposes.
I am advised by Revenue that it is not possible to distinguish VAT or MOT receipts from specific biofuels, such as HVO, from tax returns.
