Mark Daly (Fianna Fail)
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I welcome the Minister of State, Deputy Troy, to the Chamber.

Maria Byrne (Fine Gael)
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I thank the Minister of State for coming to the House to discuss this all-important issue. I raised this back in August 2024 and I am raising it again. It is on the removal of VAT from sunscreen products. Sunscreen is considered a cosmetic product whereas in actual fact it is a healthcare product, in that it protects against skin cancer. In Ireland, we have 13,000 diagnoses of skin cancer per year. It is one of the highest numbers in terms of types of cancer diagnoses and it is expected to double by 2045. This is about UV rays. While we do not have as much sun in Ireland as there is in other countries, it is about the rays. Regardless of whether the sun is shining, the rays still get to our skin. The 23% VAT rate raises an issue of people having access to sunscreen. This issue mainly concerns people with fair skin or sensitive skin and people who are on low incomes and cannot afford this luxury, because it is called a luxury product. I know Councillor Dara Mulvey in Sligo raised this issue recently at council level, and a lot of pressure has been coming from healthcare professionals and advocacy groups. I believe it is something we need to look towards because we need to give people access to a preventative measure in the form of sunscreen. A good sunscreen is very expensive, and even more so with VAT.

There is a group called Face the Future Ireland, which is an online store, and I am not encouraging people to shop online, which has reduced the price of its sunscreen by over 20% until October to highlight the high rate of VAT on sunscreen and to encourage people to buy sunscreen.

Are there any moves likely in this regard? I ask because I believe we must forward in a proactive measure to make sure sunscreen is accessible to all.

Robert Troy (Longford-Westmeath, Fianna Fail)
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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.

Maria Byrne (Fine Gael)
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While I understand we must comply with European law, perhaps I need to raise directly with the Minister for Health and suggest that sunscreen be added to the medicines list or be listed as a preventative cure. Ireland has a high rate of skin cancer and the VAT rate makes it so prohibitive that many people cannot afford to buy sunscreen. It can be quite expensive, especially the better products which have extra ingredients that prevent skin cancer.In the long term, it would be a cost-saving measure because if you can prevent something or cure it, people do not have to have treatment. Perhaps the Minister of State will take back to the Minister the question of whether there is any way of changing how sunscreen is classified.

Robert Troy (Longford-Westmeath, Fianna Fail)
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I again thank the Senator for raising this issue. I acknowledge that it is very important for many people.

The position remains that the VAT directive provides that all goods and services are liable for VAT at the standard rate unless they are exempt from VAT or fall within Annex III of that directive, in respect of which member states may apply reduced rates of VAT. As sunscreen products are not included anywhere within Annex III of the VAT directive, the VAT applied to them must be at the standard rate of 23%. The only way that the VAT rate could be reduced on sunscreen products would be to reduce the standard rate of 23%. However, the estimated cost of a 1% reduction in the standard rate of VAT would be €653 million, which is high. A reduction must be applied to all products currently at that rate, so this is obviously not an option.

Unfortunately, there is no scope to change how sunscreen products are treated from a VAT perspective without a change in the EU VAT directive. Such a change would rely on a proposal from the European Commission in the first instance, followed by unanimous agreement by all member states to the change. At present, no such proposal is on the horizon.

The Senator made a valid point on the designation of sunscreen. If the designation changed from a cosmetic product to a healthcare product, would it then fall as VAT-free under the directive? We need to check that out. It may not. Even if the designation changes, I am led to believe that it must be specifically designated and negotiated on a unanimous basis across Europe. We will double-check that, as the Senator requested. I will get my officials to come back to her in that regard.

Mark Daly (Fianna Fail)
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Before we take the next Commencement matter, I welcome the people from Praxis Care in Mulhuddart, who are guests of Emer Currie, who used to be a Member of this House. I also welcome the group who are here at the invitation of the Ceann Comhairle, Verona Murphy. I thank them for being here.