Robert Troy (Longford-Westmeath, Fianna Fail)

I thank the Senator for raising this important issue and for her ongoing advocacy in this regard.

I am advised by Revenue that the VAT rating of goods and services is subject to EU VAT law, with which Irish law must comply. In general, the VAT directive provides that all goods and services are liable to VAT at the standard rate unless they are exempt from VAT or fall within Annex III of the directive, in respect of which member states may apply reduced rates of VAT. The reduced rates of VAT in Ireland are 9% and 13.5%, respectively. Under VAT law, there is, unfortunately, no scope for a reduction in the rate of VAT on sunscreen products as it is not one of the products listed in the aforementioned Annex Ill. Therefore, the supply of sunscreen products is liable to the standard rate of VAT of 23%.

I understand that, in 2023 - the Senator said she raised it in August 2024, so between those times - this issue was something the then Minister for Finance, Michael McGrath, asked to be raised directly with the European Commission. Following his instructions, officials sought clarity on whether the text of Annex Ill of the VAT directive, which refers to pharmaceutical products, could be understood to include sun protection products. However, the European Commission confirmed the position that it was not possible for sunscreen products to be considered pharmaceutical products as they are deemed to be classed as a product in the category of cosmetic or toilet preparations. In those circumstances, the Commission advised that a reduced rate cannot be applied to sun protection products such as sunscreen.

It should be noted that with regard to Annex Ill of the VAT directive, I have been advised that an agreement was reached to amend and expand its scope in April 2022. These changes to the VAT directive, which require unanimity among member states, were negotiated over a four-year period. I understand no further changes to Annex Ill of the VAT directive are expected in the medium term. The Senator also be aware that the changes made to Annex Ill of the VAT directive did allow the Government to apply a zero rate of VAT to non-oral medicines, such as hormone replacement therapy patches and creams, and to nicotine replacement therapy patches. In addition, the Government was able to move the VAT rate for automatic external defibrillators to zero, which the Senator will be aware was a long-standing request of many in the Oireachtas. Worthy of mention is the fact that Ireland has always maintained a zero rate of VAT on oral medicines and ensured these zero rates were maintained in the 2022 agreement.

In summary, because sunscreen products are not considered a medicine for the purposes of the VAT directive, it is not possible to apply a reduced or zero rate to them. There is, unfortunately, no scope at this time to change this position. I am sorry I am not the bearer of better news for the Senator.