Richard Bruton (Dublin North Central, Fine Gael)
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Question 275: To ask the Minister for Finance the circumstances in which VAT can be refunded to persons doing small home improvements or one-off building; if a more generous regime of VAT rebate applies in Northern Ireland; and if he will make a statement on the matter. [29761/08]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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The position is that the VAT regime generally and the rate of tax applying to the supply of goods and services are subject to the requirements of EU VAT law with which Irish VAT law must comply.

I am advised by the Revenue Commissioners that the rate at which Irish VAT is charged on the supply of buildings and on the service of carrying out home improvements is generally the reduced rate of 13.5%, while the VAT rate on the supply of materials used in buildings and in home improvements is normally the standard rate of 21%. When VAT is charged to persons who are registered for VAT, those persons are entitled to reclaim that VAT subject to the normal rules. However, when VAT is charged to persons acting in a private and personal capacity, those persons are not entitled to reclaim it.

Accordingly, VAT cannot be refunded to private persons constructing one-off buildings or doing home improvements. An exception is made, however, in the case of certain goods supplied to disabled persons. The Value-Added (Refund of Tax) Order 1981, SI No. 428 of 1981, enables VAT on qualifying goods to be refunded where the goods are purchased for the exclusive use of disabled persons suffering a specified degree of disablement. Building constructed or adapted exclusively for use by disabled persons may qualify for a VAT refund. Refunds are dealt with on a case by case basis by the Revenue Commissioners depending on the circumstances of the goods and the disability of the person concerned.

I would also point out that a scheme of disabled persons grants is operated by local authorities with capital provision from the Department of the Environment, Heritage and Local Government. These grants are designed to meet the needs of persons who are either physically handicapped or are suffering from severe mental illness. Where a new dwelling is being bought or built a maximum grant of €12,700 is payable. In the case of adaptation of an existing dwelling, 95% of the approved cost of the works is available up to an effective maximum grant of €30,000. Full details of the scheme and the conditions applicable are available from the local authority in whose area the dwelling is situated.

In so far as a comparison with the position in Northern Ireland is concerned, the position is that in Northern Ireland and in the UK generally the rate at which VAT is charged on the supply of a building designed as a dwelling is the rate of 0%, while the VAT rate on the renovation or alteration of qualifying residential premises is generally the UK reduced VAT rate, which is 5%. Furthermore, when certain building services are supplied to disabled persons VAT can be charged at the rate of 0%.

Under the EU VAT Directive a Member State may retain a 0% rate and a reduced rate of VAT on supplies of goods and services where those rates applied on 1 January 1991. However, Member States cannot now extend a 0% rate to supplies of other goods and services, and can only extend the reduced rate to supplies of goods and services where this is specifically allowed for in the VAT Directive. Accordingly, I am not in a position to extend the 0% rate of VAT to the 'one-off building' of homes or on small home improvements.

Róisín Shortall (Dublin North West, Labour)
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Question 276: To ask the Minister for Finance the circumstances under which a PAYE taxpayer may qualify for tax relief or credits on expenditure on childcare; the amount of tax expenditures that have been paid by the Exchequer to employees and employers in each of the past three years for which figures are available on childcare costs; the number of employees and employers who benefited in each of these years with a breakdown, in respect of employees, of total amounts claimed by salary brackets; the upper ceilings that apply on the total amounts that can be claimed; the circumstances in which employees may qualify for tax relief or credits if their employer does not provide a childcare service and the employee pays a private childcare provider; and the steps he is taking to address this inequity in the tax system vis-a-vis small and large employers and their employees. [29767/08]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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The existing legislation does not provide for any circumstances in which any taxpayer may qualify for tax relief or credits for expenditure incurred on childcare. However, I assume the Deputy's question refers to the benefit-in-kind exemption where employers provide free or subsidised childcare for their employees. This exemption applies where an employer provides such childcare facilities "in-house" or in other premises made available by the employer. The exemption also applies if an employer provides childcare facilities jointly with other employers. The exemption also covers situations where an employer makes a contribution to the capital costs of an independent supplier of childcare facilities.

I am advised by the Revenue Commissioners that as taxpayers are not required to provide details of the receipt of this benefit-in-kind in their tax returns, there is no basis on which an estimate of the cost to the Exchequer of this tax exemption, or of the numbers availing of it, can be provided.

In the case of employers, the expense of providing or subsidising childcare facilities for employees is allowable as a deduction in arriving at profits for tax purposes. However, the employer's tax return of income does not contain an entry in respect of this item and the employer's profit and loss account does not normally distinguish between this particular expense and other employment-related expenses. In these circumstances, there is also no basis on which a reliable estimate of numbers involved can be provided.

There is no upper ceiling on the tax exempt amount of the benefit-in-kind that employers can provide through the provision of childcare facilities.

While a small enterprise might not be able to provide childcare facilities on its own, the legislation allows such an enterprise to join with other employers to provide co-located facilities, contributing proportionately to costs, and jointly providing the childcare service. In this way, smaller enterprises can collectively address the differences of scale in the provision of facilities. This reduces the potential for any inequity in the system as between small and large firms and their employees.