Emer Currie
Ceist:392. Deputy Emer Currie asked the Tánaiste and Minister for Finance the estimated cost of reducing the VAT on new build homes from 13.5% to 9%; and if he will make a statement on the matter. [37183/26]
Amharc ar fhreagraTuesday, 19 May 2026
Ceisteanna (392, 393, 394, 396)
Emer Currie
Ceist:393. Deputy Emer Currie asked the Tánaiste and Minister for Finance the estimated cost of removing the VAT on new build homes entirely; and if he will make a statement on the matter. [37185/26]
Amharc ar fhreagraEmer Currie
Ceist:394. Deputy Emer Currie asked the Tánaiste and Minister for Finance the estimated impact on the average new built cost if the VAT rate was reduced from 13.5% to 9%; and if he will make a statement on the matter. [37187/26]
Amharc ar fhreagraEmer Currie
Ceist:396. Deputy Emer Currie asked the Tánaiste and Minister for Finance if his Department would consider extending the 9% VAT reduction on new build apartments to new build homes; the estimated cost of such a measure; and if he will make a statement on the matter. [37240/26]
Amharc ar fhreagraFreagraí scríofa
I propose to take Questions Nos. 392, 393, 394 and 396 together.
As the Deputy may be aware, the EU VAT Directive, which Irish VAT law must comply, generally holds that all goods and services are liable for VAT at the standard rate. Where a good or service is included in a list of categories under Annex III of the Directive, a reduced rate or exemption may be applied.
Ireland currently avails of a derogation within the Directive that allows for a VAT rate below the standard to be applied to goods and services not included under Annex III. A key condition of this derogation is that a rate must be set no lower than 12% and cannot be reduced further as it is considered a "parked rate". This has been the basis of the 13.5% rate applying to all construction activity in Ireland.
Since April 2022 it is now possible for Ireland to apply a reduced rate of VAT e.g. a 9% rate to the supply and construction of housing, as part of a social policy, and to the repair and renovation of residential housing (non-residential construction is not within scope of this reduced rate).
In Budget 2026 the VAT rate for the construction and supply of qualifying apartments and apartment blocks was reduced from 13.5% to 9% until end 2030, as part of a social policy to deliver higher density housing. This accords with national housing policy, is targeted at the area where the viability gap is most acute and complements existing national schemes such as the Croí Cónaithe scheme.
A 0% VAT rate may be applied to a maximum of 7 of any of the categories included under Annex III. As Ireland already applies the 0% rate to the maximum number of categories, there is no scope to expand this to the construction of new housing.
The estimated annual cost for applying a 9% VAT rate to the construction of non-apartment housing is €635 million. There is no expectation that any VAT reduction to the construction of non-apartment housing would benefit consumers as developers could increase the base price of houses to increase their profit without reducing prices for consumers.
Given the centrality of housing to the achievement of Government’s wider societal and economic goals, the Department of Finance closely monitors all aspects of the housing market including building activity, the labour market, costs and prices.
Question No. 393 answered with Question No. 392.
Question No. 394 answered with Question No. 392.