Patrick O'Donovan (Limerick, Fine Gael)
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66. To ask the Minister for Finance the criteria for the two thirds rule in the event of selling machinery when the repairs total two thirds of the total cost, should the value added tax rate be increased or remain the same for selling machinery; and if he will make a statement on the matter. [15943/15]

Michael Noonan (Limerick City, Fine Gael)
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I am advised by the Revenue Commissioners that the standard rate of VAT, currently 23%, which is the highest of the VAT rates, applies to the sale of machinery.  Therefore, there are no circumstances in which the VAT rate could be increased when machinery is sold.

I would point out that the two-thirds rule mentioned by the Deputy applies to a supply of services where the value of the goods included in the supply exceeds two thirds of the total price charged.  For example, where the cost to the repairer of materials used in the repair of a washing machine is €120 exclusive of VAT and the total charge for the repair work is €150 the standard rate of 23%, which is the rate applicable to the materials, is also the rate that applies to the total charge of €150.  This situation contrasts with the reduced rate of VAT of 13.5% which normally applies to repair services where the materials used do not exceed two thirds of the total charge.  I am further advised by the Revenue Commissioners that they cannot envisage any circumstance in which the conditions required for the application of the two-thirds rule would apply to costs incurred in repairing machinery prior to its sale so as to alter the VAT rate from the standard rate.