Willie Penrose (Westmeath, Labour)
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Question 140: To ask the Minister for Finance further to correspondence (details supplied) the mechanism or means by which VAT that has been charged to consumers for the purchase of optical items, or services rendered, will be refunded to them, on foot of a recent court decision; if there is a mechanism or means by which this could be put in place in order to ensure that the consumers will receive the benefits of such refunds if they are entitled to same; and if he will make a statement on the matter. [39867/06]

Brian Cowen (Laois-Offaly, Fianna Fail)
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I am advised by the Revenue Commissioners that, historically, they had treated the supply of corrective spectacles and contact lenses by an optician as a single supply chargeable at the standard rate of VAT (currently 21%). Opticians had, in general, accounted for VAT on the full price for the supply of spectacles and contact lenses. Opticians have always been exempt from VAT in respect of the professional fees received from eye testing, which has always been treated as a separate supply.

The Appeal Commissioner decided, in a test case, that the supply by an optician of spectacles and contact lenses constituted two separate supplies for VAT as follows:

(i) A taxable supply of goods.

(ii) An exempt supply of dispensing services.

The decision in question followed similar decisions in the UK courts. The Revenue Commissioners have accepted the decision. The principle that there are in fact two separate supplies involved is beyond dispute.

As a result, many opticians now find themselves in a position to claim a refund from Revenue of a portion of the VAT accounted for by them on their supplies of corrective spectacles and contact lenses. VAT is a consumption tax collected and accounted for by businesses. Refunds of VAT are made to the persons chargeable to, and accountable for, the tax. There are no provisions in EU VAT law which could enable repayment of VAT to be made by Revenue to the ultimate consumer, in this instance, the customers of the opticians. Therefore, the question of refunds to the opticians' customers is a matter for the optician and customer concerned.