Tommy Broughan (Dublin North East, Labour)
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Question 210: To ask the Minister for Finance his views on permitting citizens carrying out small refurbishments or extensions on their homes to claim back VAT, or to enable them to register temporarily for VAT in order that they could discharge this function as a mechanism to discourage the black economy in construction, to encourage small builders to obtain work in the recession and as a boost to legitimate employment in housing and construction; and if he will make a statement on the matter. [12026/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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Irish VAT law must comply with the EU VAT Directive, which provides that individuals are in general outside the scope of VAT. Essentially only VAT registered persons who charge VAT are able to recover VAT. In addition, in order to register for VAT and thus be entitled to claim VAT deductions, an individual or business must be economically active and the VAT deductions must relate directly to that economic activity.

With regard to discouraging the black economy in the construction industry and boosting legitimate employment in housing and construction, I would point out Ireland applies the reduced VAT rate of 13.5% to all housing and construction.