Michael Healy-Rae (Kerry South, Independent)
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54. To ask the Minister for Finance if he will consider measures such as the extension of EIIS to nursing homes or the application of a zero or very low rate VAT to nursing home construction expenditures. [9863/14]

Michael Noonan (Limerick City, Fine Gael)
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I am advised by the Revenue Commissioners that there were various schemes of accelerated capital allowances in operation from the late 1990's until 2010 and 2011 in relation to expenditure incurred on the construction of registered nursing homes, convalescent homes and certain residential units associated with registered nursing homes. The allowances were claimed at the rate of 15% per annum over 7 years (10% in the final year). It is likely, therefore that some of these allowances are still being claimed in respect of pre 2011 expenditure.  At the present time, expenditure on the construction of these types of buildings does not qualify for any capital allowance.

The Employment and Investment Incentive (EII) is provided for in Part 16 of the Taxes Consolidation Act 1997. Income tax relief is given to individuals investing up to a maximum of €150,000 per annum through the purchase of shares in qualifying small and medium sized trading companies. The relief is restricted to investments which are used by the company for the purposes of carrying on relevant trading activities. The limitation of the relief to trading activity excludes the application of the relief to capital investment such as the acquisition or construction of nursing homes. Additionally the definition of "relevant trading activities" in the legislation specifically excludes "operating or managing nursing homes".

Services consisting of the development of non-residential immovable goods are, in general, liable to VAT at the reduced rate, currently 13.5%, in accordance with paragraph 15 of Schedule 3 of the Value-Added Tax Consolidation Act 2010. The Deputy suggests that a lower rate of VAT be applied to a sub-set of non-residential development, namely, construction of nursing homes. The VAT rating of goods and services is subject to the requirements of EU VAT law with which Irish VAT law must comply. A change in VAT rates must be in compliance with the EU VAT Directive. The European Court of Justice (CJEU), which is the final arbiter on VAT matters, has ruled in a number of cases, most recently in the Bridport & West Dorset Golf Club Limited case (C-495/12), that the application of VAT must be uniform across all categories of recipients of services. Therefore, it is not possible to provide for a lower rate of VAT on construction services for a specific category of recipient only, such as, the nursing home sector.