Aengus Ó Snodaigh (Dublin South Central, Sinn Fein)
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Question 577: To ask the Minister for the Environment, Heritage and Local Government the implications of the EU ruling on charging VAT on local authority services in the future; the discussions he has with city and county managers regarding this matter; if he has had discussions on the EU ruling with the Department of Finance; the options that exist for local authorities or the public paying the VAT to be given a rebate on the VAT paid in these instances in the future. [6352/10]

John Gormley (Dublin South East, Green Party)
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The European Court of Justice in July 2009 delivered its judgment in a case against Ireland in respect of the charging of VAT by public bodies on certain economic activities. The court ruled that public bodies must charge VAT on a range of services to avoid distorting the market between private and public operators. The judgment has implications for all public bodies in Ireland, including local authorities. The Finance Bill 2010 includes legislation to amend the current legal provisions in this area and the proposed commencement date is 1 July 2010.

My Department is participating in an interdepartmental group, chaired by the Department of Finance and including the Revenue Commissioners, on the interpretation of the judgment and its implications for local authorities. A working group of departmental and local authority Finance Officers has been established also to deal with implementation issues in the local government sector. Businesses that are registered for VAT are entitled to recover VAT incurred on their business inputs. Consequently, the extension of VAT to local authority provided services will have no impact on those businesses. Local authorities will be entitled also to deduct VAT on their inputs from the commencement date which should enable them to minimise increases in service costs to be passed on to their customers.