Micheál Martin (Cork South Central, Fianna Fail) | Oireachtas source

I thank the Deputy for raising the issue. The Department of Finance is advised by Revenue the VAT rating of goods and services is subject to EU VAT law. In general, the VAT directive provides all goods and services are liable for VAT at the standard rate, currently 23% in Ireland, unless they fall within categories of goods and services specified in the directive. The directive also allows for historic VAT treatment to be maintained under certain conditions.

Ireland has retained the application of VAT exemption to the transport of passengers and their accompanying baggage. This means the supplier does not register for VAT, does not charge VAT on the supply of their services and has no VAT-recovery entitlement on costs where such costs are used for the exempted supply of passenger transport. Ireland may continue to apply the VAT exemption on the supply of domestic passenger transport as governed by Article 371 of the VAT directive. However, it cannot change the conditions under which the exemption was granted. In accordance with the directive a reduced rate of VAT could be introduced to the supply of passenger transport in place of the exemption that currently applies. While this would give the transport operator deductibility in relation to VAT on their business inputs it would involve charging passengers VAT on their fares.

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