Robbie Gallagher (Fianna Fail)
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I welcome the Minister of State to the Chamber this morning. Dental services in Ireland are exempt from VAT in accordance with EU legislation. This is vitally important, because dental treatment should be cost-effective and it should be provided at a cost that does not prohibit public or private patients from availing of it. A new interpretation by the Revenue Commissioners, however, concerning fees paid by associate dentists to principal dentists, threatens to undermine Ireland’s dental scheme entirely and to cause many problems for dental practices and the patients who use those practices regularly.

Many fear that the increased costs which will be incurred by dentists from having to apply an additional charge in respect of VAT at 23% will result in people putting off visits to their dentist or simply not going at all because they cannot afford to do so. A VAT increase of 23% will mean higher costs for dentists and patients. Dental practices across Ireland will be impacted, but particularly those in the Border region where I come from. They already face stiff competition from dentists in Northern Ireland, because a 23% VAT rate is not charged there.

Approximately 300 dentists practising across the Border region are directly threatened by the imposition of this VAT rate. All of them will be subject to increased costs and some consideration must be given to the impact this development will have on ordinary people and the increased costs they will end up paying for their dental care. This situation also has serious implications for the future of many dental practices. An added VAT liability of 23% would have enormous economic implications and consequences for the viability of dental practices in the Border region that compete, as I said earlier, with dentists in Northern Ireland. This is an issue that would affect dentists across the entire Republic of Ireland, where access to dental care is already at crisis level.

Representatives of the Irish dental sector maintain that it is already in a state of crisis. At present, the medical card system in this regard, the dental treatment services scheme, DTSS, operated by dentists for the HSE, is losing participating dentists daily at a significant rate.The latest figures suggest there are fewer than 700 dentists operating a scheme that caters for 1.5 million medical cardholders. This equates to more than 2,000 patients per dentist. If a VAT liability is applied to dentists there would be widespread closures of dental practices and a further decline in the service to the public. I am disappointed to see that the HSE and the Department have failed to engage on the DTSS, which is a separate issue but it is connected to what I am talking about here this morning.

A recent survey carried out across 19 EU countries showed that none of them were charging VAT at 23% for dental services. This also applies in the UK. This issue needs to be looked at with a degree of urgency. I thank the Minister of State for coming to the Chamber this morning to take this issue on behalf of the Minister for Finance, Deputy Paschal Donohoe. I plead with the Minister of State that a meeting could be organised between the Irish Dental Association and the Minister to try to work out some solution to this problem.

Frank Feighan (Sligo-Leitrim, Fine Gael)
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I am advised by the Revenue Commissioners that a VAT exemption applies to dental services provided to a patient by clinic, a principal dentist or an associate dentist, and this has not changed. The supply of facilities to a dentist to enable him or her to carry out a dental practice, is subject to VAT, and this has always been the case. Some dental practitioners operate a fee-sharing arrangement where a principal dentist provides a premises and other facilities to other dentists in exchange for a fee, and provision of such premises and other facilities constitute a service, which has always been subject to VAT.

In summary, the exemption from VAT in respect of dental services relates only to a dental service provided to a patient. The supply of premises and other facilities to a dentist in exchange for a consideration is not, and never has been, covered by the VAT exemption. This approach is fully in line with the VAT directive, with which Irish law must comply. Exemption from VAT for certain activities in the public interest are set out in Chapter 2 of Title IX of the directive, and these provisions are transposed into Irish legislation in Part 1, Schedule 1 to the Value-Added Tax Consolidation Act 2010, where paragraph 2 (5) of Schedule 1 provides for an exemption in respect of supply of professional dental services. The legislation that transposes Article 132 of the directive, and Revenue's interpretation of the legislation, ensures that exemption from VAT to the supply of dental services is applied consistently in a manner that is not dependent on the legal form of the person supplying the service. In accordance with the directive and the current jurisprudence of the European Court of Justice, the VAT exemption applies to dental services provided by a clinic, a principal dentist, or by an associate dentist whose services are provided to a patient.

I am aware that dental practitioners are seeking that the VAT exemption on dental services for patients would also apply to the supply of premises and facilities provided by one dentist to another. Aside from the central legislative position that I have already outlined, there is also an issue of fairness in why such an approach would be inappropriate. It is quite possible for a person other than a dental practitioner to provide some or all of these services to another dentist, and in such a case the supply of the services would be chargeable to VAT in the normal way. Therefore, it would distort competition if the service were to be exempt solely on the basis that it was provided by a dental practitioner. The EU principle of fiscal neutrality ensures that where economic operators are carrying on the same or closely related activities, then those operators should not be treated differently in relation to VAT. I understand that Revenue has been clear at all times regarding the VAT treatment of dental fee-sharing arrangements, and has outlined its position in correspondence and meetings with the Irish Dental Association.

With regard to the VAT applicable to the supply of dental services in Northern Ireland from 1 January 2021, Northern Ireland is no longer part of the EU in respect of the supply of services and is therefore no longer under the remit of the VAT directive in relation to those services. The Senator has outlined an issue that is of concern with regard to the UK leaving the EU, which has created that anomaly as the Senator has rightly outlined. I also represent a Border constituency. The Senator has sought a meeting with the Minister and I will bring his concerns and those of the Irish Dental Association, back to the Minister. It is an issue that has emerged over the past year and I thank the Senator for raising this important matter.

Robbie Gallagher (Fianna Fail)
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I thank the Minister of State for his response. As I said earlier, this could have serious implications for dental practices along the Border areas in particular and for all of the citizens who live in those areas. From my information, the European Court of Justice has made deliberations on this particular subject. As I said in my earlier contribution, a recent survey showed that 19 EU countries do not charge VAT for dental practices, and the UK also does not charge VAT. It puts Ireland in an awkward position and many dental practices in a very bad position. I would be grateful if the Minister of State could use his good offices to arrange a meeting with the Minister for Finance, Deputy Donohoe, and the Irish Dental Association to tease through the issues. The Irish Dental Association has serious concerns and would like the Minister for Finance to listen to those concerns. I would be grateful if the Minister of State, Deputy Feighan, could facilitate a meeting on their behalf.

Frank Feighan (Sligo-Leitrim, Fine Gael)
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I cannot speak on behalf of the Minister but if the Senator would send an email to me requesting that meeting I will raise it with the Minister. The Revenue Commissioners are also satisfied that the correct interpretation of the legislation has been communicated to the Irish Dental Association consistently since they first raised this issue in 2018. When a person or group is not satisfied with the response from the Revenue Commissioners they can raise the matter with the Tax Appeals Commission, whose role it is to adjudicate, hear and determine appeals against the decisions or determinations of the Revenue Commissioners concerning taxes and duties.

With regard to the situation in Northern Ireland and the rest of the UK, unfortunately a different tax or VAT regime applies, and the Revenue Commissioners are satisfied that there is no scope in the VAT directive to exempt the fees in question from VAT. The Senator, however, has raised an issue that is unique in the Border area that has been accelerated over the past months. Perhaps the Senator will write to me looking for a meeting with the Minister and I will seek to have that meeting.

Robbie Gallagher (Fianna Fail)
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I thank the Minister of State for his time.