Written answers

Thursday, 24 November 2011

5:00 pm

Photo of Ciarán LynchCiarán Lynch (Cork South Central, Labour)
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Question 54: To ask the Minister for Finance his plans to change the tax treatment of redundancy payments in either the private sector or the public sector; and if he will make a statement on the matter. [36720/11]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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It is a long-standing practice of the Minister for Finance not to comment in advance of the Budget on any tax matters that might be the subject of Budget decisions.

Photo of Simon HarrisSimon Harris (Wicklow, Fine Gael)
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Question 55: To ask the Minister for Finance the basis on which the decision was taken to charge VAT on entrance fees to historic houses, stately homes and gardens and open farms; the reason for the discrepancy in the VAT rate to be applied to historic houses and stately homes compared to open farms; if any evaluation of the impact of this change on the tourist trade has been conducted; and if he will make a statement on the matter. [36723/11]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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With regard to the decision to charge VAT on entrance fees to historic houses and open farms, I have been informed by the Revenue Commissioners that fees charged for entry to historic houses, stately homes and gardens (collectively referred to as historic houses) and open farms were until recently treated as VAT exempt "lettings of immovable goods". This VAT exempt treatment followed a 1970s Revenue Appeal Commissioner's decision, in a particular case, relating to a right granted to a person to enter a house and gardens.

Irish VAT legislation must be in accordance with the EU VAT Directive and must be interpreted in a manner set out in decisions of the European Court of Justice (ECJ). Having regard to a number of decisions of the ECJ, and a recent challenge by the owner of an historic house to the existing exemption from VAT of such activities, the entry fees to historic houses, and other facilities such as open farms, could no longer be treated as fees for VAT exempt lettings. Therefore, in order to be compliant with EU law it was necessary to bring such fees within the charge to VAT. A start date of 1 January 2012 was chosen to allow a lead in time to prepare for the 2012 season. Full details of the changes were set out in a VAT Information Leaflet issued in August 2011.

In relation to the different VAT treatment applied to historic houses and open farms, paragraph 8 of Schedule 3 of the Value-Added Tax Consolidation Act 2010 provides that the reduced rate (at 9%) applies to admissions to exhibitions of objects of historical, cultural, artistic or scientific interest where these objects are displayed in a manner similar to a museum or art gallery. So, for example, the display of furniture, paintings, etc. in a grand hall in an historic home is a display of historical or artistic interest. However, as paragraph 8 does not apply to admission fees to open farms; such fees cannot apply at the 9% rate and as such are liable to VAT at the standard rate of 21%.

I would point out however that an exemption from VAT may still apply to historic houses and open farms in certain circumstances. Historic houses and open farms, like any other service business, may opt not to register for VAT if their entrance fee turnover is under the registration threshold of €37,500 per annum. Where this is the case VAT will not apply to admission fees.

In the case of historic houses and gardens, separate from their turnover, they may in addition qualify for VAT exemption under the "activities in the public interest" provisions set out in paragraph 3(5) of Schedule 1 of the Value-Added Tax Consolidation Act 2010. This provides that an exemption may apply where the supply is of a cultural service by a cultural body. In this regard, cultural bodies for the purpose of this exemption are determined on a case-by-case basis by Revenue, generally where such exemption would not distort competition and the body is non-profit making.

While the impact of this new ruling on the tourist trade has not been evaluated, the change in the VAT treatment of entrance fees to historic houses and open farms was not optional; it was required in order to be compliant with the EU VAT Directive as interpreted by the ECJ. I will, however, look at this issue further in the context of the Budget.

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