Pat Carey (Dublin North West, Fianna Fail)
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Question 368: To ask the Minister for Finance if, arising from provisions included in budget 2006 relating to the provision of home care services for elderly persons in their own homes, such services will incur a 13.5% VAT charge while exactly similar services provided in nursing homes will be VAT exempt as outlined in correspondence, details supplied; and if he will make a statement on the matter. [3227/06]

Brian Cowen (Laois-Offaly, Fianna Fail)
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The position is that home care services provided directly by the Health Service Executive, HSE, do not generally come within the scope of VAT, as public bodies are not regarded as taxable persons. This means that they do not charge VAT on the services they provide and cannot recover VAT incurred on their input costs.

The package of services aimed at older people, announced by the Tánaiste in the 2006 budget, is to be based on the pilot home care packages in place and will deliver a wide range of services. The packages are delivered through the HSE by a range of providers, including the HSE itself, voluntary groups and the private sector. Home care packages will consist of a mixture of grants, contracted care services, therapeutic input and equipment and other such community services as identified in the needs assessment as being necessary to facilitate the older person to remain living in his or her own home.

However, where home care services are provided for by private companies for a consideration in the course or furtherance of business, the provider may be obliged to register and account for VAT at the appropriate rate depending on the type of service it provides. Home care provided to individuals consists of a variety of services which may be liable to VAT at different rates. The current VAT treatment of such services is in accordance with the EU sixth VAT directive, with which Irish VAT law must comply.

However, officials from my Department, the Revenue Commissioners and the Department of Health and Children are examining this issue. In particular, they are trying to ensure that the home care services provided under this package are exempt from VAT in a manner that complies with EU law. In this regard, I understand that a national standardised needs assessment process will be developed by the HSE in 2006, which will design systems and approaches to the implementation of the home care packages based on its experience to date. When this is put in place, it should make it possible to exempt such services from VAT in line with EU law.