Derek Nolan (Galway West, Labour)
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83. To ask the Minister for Finance if he will broaden the remit of those businesses who benefit under the special VAT rate of 9% for beauticians working in the tourism industry; and if he will make a statement on the matter. [8454/14]

Michael Noonan (Limerick City, Fine Gael)
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VAT is charged on the supply of goods and services, and the rate applying is subject to the requirements of EU VAT law with which Irish VAT law must comply.  While most tourist related services are subject to the 9% reduced VAT rate, it is not possible to extend this treatment to all tourist activity, such as beauticians working in the tourism industry.

While hairdressing services apply at the 9% rate, services consisting of the care of the human body, including beauticians, are subject to the 13.5% rate.  This arises from the fact that many of goods and services to which Ireland applies a reduced rate of VAT, including services related to care of the human body, have their basis under an EU derogation that provides that as we applied a reduced rate to these items on 1 January 1991, we are entitled to continue applying that reduced rate to those items.  However, this is conditional on the rate being no less than 12%.  These are known as 'parked' items, and are provided for under Article 118 of the EU VAT Directive.  As the services provided by beauticians are part of these parked items, it is not possible for Ireland to apply the rate of 9% to them.

It is for this reason that the 9% VAT rate applies in respect of tourist activities such as restaurant and hotel accommodation services, while other tourist activities such as tour guide services and the short-term hire of cars, boat, caravans and mobile homes are liable to VAT at the 13.5%.  However, it should be noted that in the majority of EU Member States services consisting of the care of the human body apply at their standard VAT rate of up to 27% in some cases, compared to 13.5% in Ireland.