Paschal Donohoe (Dublin Central, Fine Gael)
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I move amendment No. 66:

In page 89, between lines 17 and 18, to insert the following:

“Amendment of section 46 of, and Schedule 3 to, Principal Act (reduced rate for housing as part of a social policy)

67. (1) The Principal Act is amended, with effect as on and from 8 October 2025—

(a) in section 46(1)—

(i) in paragraph (a), by the insertion of “(cab),” after “(caa),”,

(ii) in paragraph (c), by the insertion of “, (cab)” after “(caa)”, and

(iii) by the insertion of the following paragraph after paragraph (caa):

“(cab) during the period from 8 October 2025 to 25 November 2025, 9 per cent in relation to goods of a kind specified in paragraph 9A of Schedule 3 on which tax would, but for this paragraph, be chargeable in accordance with paragraph (c);”,

and

(b) in Schedule 3—

(i) in Part 2, by the insertion of the following paragraph after paragraph 9:

“Housing as part of a social policy.

9A. The supply of housing, as part of a social policy, being the supply of an apartment, used or to be used for residential purposes, in an apartment block within the meaning of section 31E of the Stamp Duties Consolidation Act 1999.”,

(ii) in Part 3, by the substitution of the following paragraph for paragraph 14:

“14. Subject to paragraph 9A, the supply of immovable goods used or to be used for residential purposes.”.

(2) The Principal Act is amended, with effect as on and from 26 November 2025— (a) in section 46(1)—

(i) in paragraph (a) (amended by subsection (1)(a)(i)), by the insertion of “(cac),” after “(cab),”,

(ii) in paragraph (c) (amended by subsection (1)(a)(ii)), by the insertion of “, (cac)” after “(cab)”, and

(iii) by the insertion of the following paragraph after paragraph (cab) (inserted by subsection (1)(a)(iii)):

“(cac) during the period from 26 November 2025 to 31 December 2030, 9 per cent in relation to—

(i) goods of a kind specified in subparagraph (2) of paragraph 9B of Schedule 3, and

(ii) services of a kind specified in subparagraph (3) of paragraph 9B of Schedule 3,

on which tax would, but for this paragraph, be chargeable in accordance with paragraph (c);”,

and

(b) in Schedule 3—

(i) in Part 2—

(I) in paragraph 9(1), by the insertion of “(not being services referred to in paragraph 9B(3))” after “Services”, and

(II) by the insertion of the following paragraph after paragraph 9A (inserted by subsection (1)((b)(i)):

“Supply and construction of housing as part of a social policy.

“9B.(1) In this paragraph, ‘apartment block’ means a multi-storey building that comprises, or will comprise, not less than 3 apartments with grouped or common access.

(2) The supply, as part of a social policy, of—

(a) one or more than one apartment, used or to be used for residential purposes, in an apartment block, or

(b) an apartment block, used or to be used for residential purposes, but excluding any part of the apartment block that is not used or to be used for residential purposes.

(3) Services consisting of the construction until completed (within the meaning of section 94), as part of a social policy, of—

(a) one or more than one apartment, used or to be used for residential purposes, in an apartment block, or

(b) an apartment block, used or to be used for residential purposes, but excluding any part of the apartment block that is not used or to be used for residential purposes.”,

(ii) in Part 3, by the substitution of the following paragraph for paragraph 14 (amended by subsection (1)(b)(ii)):

“14. Subject to paragraphs 9A and 9B(2), the supply of immovable goods, used or to be used for residential purposes.”,

and

(iii) in Part 4, in paragraph 15(2), by the insertion of “or 9B(3)” after “paragraph 9(1)”.”.

This section, which I am now amending, provides for a temporary 9% rate of VAT on the supply and construction of apartments and apartment blocks as part of our social policy. The temporary 9% rate of VAT on the supply of apartments came into effect on budget night. The extension to the construction of apartments, and the supply and construction of apartment blocks, including student accommodation, will come into effect on 26 November 2025 which is Report Stage. The 9% rate will apply until 31 December 2030.

The VAT treatment of goods and services is subject to EU VAT law, which Irish VAT law is required to comply with in general. The relevant directive provides that all goods and services are liable to VAT at the standard rate, which in Ireland is currently 23%, unless they come within provisions that permit the application of a lower rate. Under the EU VAT directive, member states may apply a reduced rate to the supply and construction of housing as part of a social policy. Ireland has two reduced rates, 13.5% and 9%. Currently in Ireland, VAT is chargeable at the rate of 13.5% on the sale of all residential property. This is utilising a "parked rate" in line with the EU directive. Parked rates cannot be reduced below 12%.

In order to stimulate the development of apartments, which are high-density homes, it has been decided, on social policy grounds, to apply the second reduced rate of VAT to the supply and construction of apartments, and apartment blocks. The legislation around VAT on property is indeed complex. There are additional complexities with drafting this provision to ensure that it is within the parameters of the EU directive, and that it delivers the policy intention but does not disturb the application of the parked rate.

Delaying the effective date of the amendment to Report Stage provides additional time to ensure maximum applicability to current business models utilised for the supply and construction of apartments and apartment blocks. My officials are continuing to engage with stakeholders on the draft legislation to achieve this. I want to advise the committee that in the event that it is determined that a further change in text is required, I will bring forward a Report Stage amendment to ensure that the text of the legislation best reflects the policy intention in line with the VAT directive. I also want to advise the committee that as a consequence of the various amendments made in relation to VAT, it may be necessary for me to bring a Report Stage amendment to the definition of a qualifying residence in respect of the help to buy scheme under section 477C(1) of the Taxes Consolidation Act of 1997.