Jan O'Sullivan (Limerick East, Labour)
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Question 205: To ask the Tánaiste and Minister for Finance the reason VAT has been introduced for psychotherapy practitioners while other health professionals such as clinical psychologists are exempt; if the decision will be reviewed; and if he will make a statement on the matter. [23985/07]

Brian Cowen (Laois-Offaly, Fianna Fail)
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I am advised by the Revenue Commissioners that there has been no change to the VAT treatment of services provided by psychotherapy practitioners. The position is that the rules and rating structure is determined by EU law with which Irish law must comply. Professional medical services are exempt from VAT in accordance with paragraph (iii) of the First Schedule to the Value-Added Tax Act 1972, as amended. Article 132(1)(c) of the VAT Directive 2006 (formerly Article 13A(1)(c) of the Sixth VAT Directive) provides that the exemption applies to "the provision of medical care in the exercise of the medical and paramedical professions as defined by the member State concerned.

In interpreting the law, the Revenue Commissioners are guided by the policy of the Department of Health and Children as to what constitutes as "medical and paramedical". As there is no system of statutory regulation for psychotherapists at present and as psychotherapy is not a designated profession for the purposes of the Health and Social Care Professionals Act 2005, the Revenue Commissioners do not treat the provision of services provided by psychotherapists as an activity which is exempt from VAT. Such services have been and continue to be liable to VAT at the reduced rate of 13.5% in accordance with paragraph (xix) of the Sixth Schedule to the Value-Added Tax Act 1972, as amended.

On the other hand, services provided by a clinical psychologist are exempt from VAT. The Health and Social Care Professionals Act 2005 provides for a system of statutory registration for a number of health and social care professions, and psychology is a designated profession under the Act. The purpose of establishing this system was to ensure that members of the public are protected and informed so that they can be confident that the professional providing the service is properly qualified, competent and of good standing. The system also ensures professional conduct and the promotion of high standards of professional education and training among health and social care professionals.