Written answers

Thursday, 7 May 2015

Department of Finance

VAT Rate Application

Photo of Eoghan MurphyEoghan Murphy (Dublin South East, Fine Gael)
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73. To ask the Minister for Finance if he will explain the discrepancies in relation to value added tax being charged by telecommunication companies (details supplied). [18069/15]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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The VAT rating of goods and services is subject to the requirements of EU VAT law with which Irish VAT law must comply.  The reduced VAT rate of 13.5% applies to the supply of gas and electricity in Ireland.  The majority of EU Member States apply a much higher VAT rate to the supply of gas and electricity as EU VAT law provides that the standard VAT rate should apply to these services.  However, as part of a derogation to EU VAT law, Ireland is entitled to retain a reduced rate to the supply of gas and electricity on the basis that we applied a reduced rate to the supply of domestic fuels on 1 January 1991. 

Separately, in relation to telecommunication, internet and television broadcasting services provided by companies such as UPC or Vodafone, these services are subject to the standard rate of VAT which is 23% in Ireland.

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.  This reflects EU VAT law, with which Irish tax law must comply.  In this regard, Article 78 of the EU VAT Directive provides that the taxable amount shall include "taxes, duties, levies and charges, excluding the VAT itself".

In this respect, where the charge for a supply of service, such as an electricity bill, includes the Public Service Obligation (PSO) levy, VAT law dictates that VAT should be calculated on the PSO levy element of the charge as well as the charge for the service.  The same situation applies in respect of a service charge on other bills as outlined by the Deputy.

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