Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

I move:

(1) THAT the rate of value-added tax chargeable on the supply and installation of solar panels on or adjacent to immovable goods, being private dwellings, at present chargeable at the rate of 13.5 per cent, be reduced to zero per cent with effect on and from 1 May 2023, and that accordingly —

(a) Schedule 2 to the Value-Added Tax Consolidation Act 2010 (No. 31 of 2010), which makes provision for the zero rate of value-added tax to apply to the supply of certain goods and services, be amended, in Part 2, by the insertion of the following paragraph after paragraph 13:

"Solar panels

14. The supply and installation of solar panels on or adjacent to immovable goods, being private dwellings.",

and

(b) Schedule 3 to the Value-Added Tax Consolidation Act 2010, which makes provision for the reduced rate of value-added tax to apply to the supply of certain goods and services, be amended, in paragraph 9(1) of Part 2, by the insertion of "other than the supply and installation of solar panels as specified in paragraph 14 of Schedule 2," after "fixtures,".

(2) THAT this Resolution shall have effect on and from 1 May 2023.

(3) IT is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act 1927 (No. 7 of 1927).

I can be brief to allow time for colleagues to come in and put questions. The purpose of this financial resolution is to reduce the VAT rate on the supply and installation of solar panels for private dwellings to 0% from 1 May 2023. The background to this financial resolution concerns changes made to annex III of the VAT directive in 2022, which added several new categories to which member states can apply a 0% or reduced rate of VAT. One such option is to apply a 0% rate within category 10c, which is for the supply and installation of solar panels on and adjacent to public and other buildings used for activities in the public interest, housing and private dwellings.

At the request of the Minister for the Environment, Climate and Communications, Deputy Eamon Ryan, and following discussion, I agreed to the 0% rate of VAT for the supply and installation of solar panels for households and private dwellings. If passed on to consumers, the Minister's Department estimates it would reduce the average cost for such supply and installation for consumers from €9,000 to €8,000 and would support households in reducing their electricity bills.

This amendment will be introduced on Report Stage of the Finance Bill 2023 later this evening. However, as it is not anticipated that the Finance Bill 2023 will be enacted until mid-May, it is necessary to introduce this financial resolution to give this amendment legal effect from 1 May 2023. The 0% rate of VAT on solar panels and ancillary equipment should result in a significant reduction in the installation costs for households and I believe it will encourage more people to avail of this innovative technology. It is important to note, however, that there is no requirement or guarantee that a reduction in the VAT rate will be passed on to the consumer, especially given the current inflationary pressures and supply chain issues prevalent in the global economy. Such a reduction, however, will hopefully help to counter any increase in prices arising from such issues. It is also hoped that the reduction in the rate of VAT will encourage reduced costs through greater competition in the market. This measure underlines the Government's commitment to helping households to save money on their energy bills, to reduce their carbon footprints and to contribute positively to our national climate change targets. The estimated cost of this measure for the Exchequer is €19 million annually. I can leave it at that by way of introductory comments.

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