Paschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

The reduced areas of flexibility refer to two new limitations that will be on member states. They are included in the third annexe of the current proposal. The first limitation will limit member states to applying a 0% rate to no more than seven value added taxable categories. The second limitation will limit member states to using a maximum of 24 categories to which a reduced rate can be applied. In other words, it will be setting a floor of no more than seven categories and a ceiling of 24 categories. The area of reduced flexibility concerns the kinds of goods and services to which a lower rate of VAT can be applied. The Deputy made reference to the question of whether these VAT rates can then be applied to the kind of changes in technologies that are needed for a lower carbon future. Indeed, they can be, but that will then depend on the decisions that individual member state Governments make.

See this speech in context