Seán Fleming (Laois-Offaly, Fianna Fail) | Oireachtas source

Our context did mention the issue of VAT and the VAT directives in that correspondence from the Minister, and as the Deputy is aware, following lengthy negotiations, amendments to the VAT directive were provisionally agreed in December 2021 with final sign-off on the amended text at ECOFIN, in April 2022. This new arrangement came into effect on 5 April, so the Deputy can see discussions in regard to this were ongoing well before the end of last year. Under the new arrangement, Annex III of the VAT directive was expanded to include gas and electricity. This means Ireland can apply the reduced 9% rate to these products in line with other goods and services. The Government has made the decision to avail of the flexibility from 1 May, which is the start of the next period.

In regard to VAT on the heating oil, this new arrangement on VAT rates also preserved Ireland's historical derogation in regard to fuel and oil, despite it not being included in Annex III. It is on this basis that Ireland applies the 13.5% reduced VAT rate to supply of fuel and oil for domestic and commercial purposes. The current 13.5% rate applies to energy products known as a part rate, and I think the Deputy is aware of that.

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