Richard Bruton (Dublin North Central, Fine Gael)
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Question 156: To ask the Minister for Finance if he has authority to move categories of goods from one VAT category to another, in particular as between the 10%, 13.5% and 21% categories; and if he will make a statement on the matter. [33810/06]

Brian Cowen (Laois-Offaly, Fianna Fail)
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The VAT rating of goods and services is subject to the requirements of EU VAT law with which Irish VAT law must comply. Ireland has a reduced VAT rate of 13.5% and a standard VAT rate of 21%. Under the Sixth VAT Directive, Member States may retain the zero rates on goods and services which were in place on 1 January 1991, but cannot extend the zero rate to new goods and services. However, it is possible to move existing zero rated items to either the reduced rate or the standard rate depending on the item in question. However, once moved, it would not be possible to revert them to the zero rate. Member States may have up to two reduced VAT rates of not less than 5% for a specified number of goods or services which are set out in Annex H of the EU Sixth VAT Directive. The goods and services in Annex H include certain foods, non-oral medicines, supply, construction and alteration of housing provided as part of a social policy, and newspapers and periodicals. Goods and services at the reduced rate may be moved to the standard rate, but only those listed in Annex H may be reverted from the standard rate to the reduced rate. In addition, Member States have the option of maintaining, at a reduced rate of not less than 12%, any items not listed in Annex H, provided they carried the reduced rate on 1 January 1991. These items are considered to be "parked" and Ireland's parked rate equates to our reduced rate of13.5%. Domestic fuels, restaurant services and labour intensive services are examples of parked items. Member States must therefore apply the standard VAT rate to those goods and services that are not subject to VAT at the zero rate and which are not listed in Annex H of the Sixth VAT Directive. I hope this helps to clarify the European legislative framework which governs Irish VAT law.