Robert Dowds (Dublin Mid West, Labour)
Link to this: Individually | In context

Question 69: To ask the Minister for Finance the reason VAT is charged on the public service obligation levy. [8679/11]

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context

The public service obligation levy (PSO levy) is charged to all electricity customers. It is designed to support the national policy objectives of security of energy supply, the use of indigenous fuels (i.e. peat) and of renewable energy sources in electricity generation. Specifically, the proceeds of the levy are used to recoup the additional costs incurred by ESB and other suppliers in having to source a proportion of their electricity supplies from such generators. In accordance with section 37(1) of the Value-Added Tax Consolidation Act 2010, the amount on which VAT is chargeable is the total consideration receivable by the supplier, "including all taxes, commissions, costs and charges whatsoever" but not including the VAT itself.

VAT is an EU-wide tax and Irish VAT law must comply with the EU VAT Directives. Article 78 of EU Council Directive 2006/112/EC provides that the taxable amount shall include "taxes, duties, levies and charges, excluding the VAT itself". Accordingly, it is correct to include any levy element of a utility bill in the amount on which VAT is chargeable, including in this case the PSO levy. The same situation applies in the case of the carbon tax and other excises, including for example excises on petrol, auto-diesel, tobacco and alcohol products. Guidance in relation to the VAT treatment of the total consideration receivable by a supplier is set out in the VAT Guide. This publication is available on the Revenue website at www.revenue.ie .