Simon Harris (Wicklow, Fine Gael)

I move:

(1) THAT the Value-Added Tax Consolidation Act 2010 (No. 31 of 2010), be amended— (a) in section 46(1) –

(i) in paragraph (a), by the insertion of "(cac)," after "(cab),",

(ii) in paragraph (c), by the insertion of ", (cac)" after"(cab)",

(iii) in paragraph (cab), by the substitution of "25 November 2025" for "31 December 2030", and

(iv) by the insertion of the following paragraph after paragraph (cab):

"(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:

"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;

'completed' has the same meaning as it has in section 94.

(2) The supply of immovable goods, as part of a social policy, which are or, when completed, will be–

(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 development, until completed, of immovable goods to which subparagraph (2) applies.",

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

"Housing.

14. The supply of immovable goods used or to be used for residential purposes, other than immovable goods to which paragraph 9A or 9B(2), as the case may be, applies.",

and

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

(2) THAT this Resolution shall have effect on and from 26 November 2025.

(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).

The first financial resolution provides for a reduction in the VAT rate applied to the supply of new apartments to 9% from 26 November 2025. This measure will apply until 31 December 2030, at an estimated cost of €250 million in 2026, with increasing costs in the following year as more apartments are built. As Deputies will recall, the temporary 9% rate of VAT on the supply of apartments came into effect on budget night. This financial resolution extends the budget night measure to cover the construction of apartments and the supply and construction of apartment blocks, including student accommodation, from tomorrow, 26 November 2025. The 9% rate will apply until 31 December 2030.

The VAT treatment of goods and services is subject to EU VAT law, with which Irish VAT law is required to comply. In general, the EU VAT directive provides that all goods and all services are liable to VAT at the standard rate, which in Ireland is currently 23%, unless they come within the provisions which 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. As colleagues know, Ireland has two reduced rates, 13.5% and 9%. The Government has committed to the delivery of 305,000 new homes, of which apartments will comprise a considerable share. It is recognised that a viability gap exists when constructing apartments in Ireland. As has been outlined in discussions of this measure in earlier stages and in discussions around the Finance Bill, the purpose of this measure is to reduce that viability gap and achieve wider policy goals, as outlined by the revised national planning framework.

Increasing density, recognising demographic and societal changes and fostering greater social cohesion can more sustainably be realised by the delivery of more apartments. As developers are incentivised to build more apartments and to commence work on the projects which have planning permission but which are not currently deemed viable, the overall housing supply will increase. The measure is set to be in place for five years. This will allow it to cover the life cycle of a building project, which can stretch over a number of years.

The legislation around VAT on property is complex. As such, this financial resolution makes changes to the text that was previously passed on budget night. These changes are to ensure that the text is in line with VAT legislation and that it achieves the original policy intention of the measure, as outlined by the former Minister, Paschal Donohoe. The measure now covers both aspects of an apartment sale sold under dual contract, that is, the sale of a site and the sale of building services to build an apartment. The revised text also includes the word "development" rather than the word "construction", which is in line with existing VAT legislation and case law.

Affordability and the chance to own a home must be at the heart of all that we do and is at the heart of our housing policy. The Government has introduced a comprehensive implementation strategy, which is in place to support the various affordable housing schemes now being delivered by a range of partners. However, to meet the housing needs of our people there has to be private sector involvement. This is what this VAT measure does - reducing the viability gap that developers face when considering whether to advance the projects across the country that have planning permission but where the sale of apartments may not lead to a profit.

I am also moving a financial resolution, as the Ceann Comhairle alluded to, in relation to the help-to-buy scheme. As a consequence of the VAT rate reduction for an apartment, it is necessary to amend the definition of "qualifying residence" in section 477C of the Taxes Consolidation Act 1997, which provides for the help-to-buy scheme, to reflect this second rate of VAT. This will ensure that new build apartments will continue to be included in the scope of the help-to-buy scheme. An amendment to section 477C has accordingly been proposed. To avoid a period between 26 November 2025 and the enactment of the Finance Bill, where such apartments would not qualify for help-to-buy during that period, the change to the definition of "qualifying residence" in the proposed amendment to the scheme will need to take effect from 26 November 2025 also.

See this speech in context