Martin Heydon (Kildare South, Fine Gael)
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70. To ask the Minister for Finance the options that could help to alleviate the additional burden of value added tax on personal insolvency deals which, while covered by the creditor, are proving a further obstacle to securing agreement on deals by creditors; and if he will make a statement on the matter. [19057/15]

Michael Noonan (Limerick City, Fine Gael)
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I have been advised by the Revenue Commissioners that VAT applies to the services of all insolvency practitioners including the activities carried out by liquidators, receivers, examiners and Personal Insolvency Practitioners (PIPs) involved in the Debt Settlement Arrangements and Personal Insolvency Arrangements as provided for in the Personal Insolvency Act 2012.  The Revenue Commissioners have considered in the past the nature of the services provided by PIPs and concluded that the services provided by a PIP are not ones that qualify for exemption in accordance with the VAT Directive, Irish VAT Law, and relevant decisions of the European Court of Justice.  The fees charged by insolvency practitioners, including PIPs, are liable to VAT at the standard rate, currently 23% (Section 46 Value-Added Tax Consolidation Act 2010).  Under a Personal Insolvency Arrangement, the Personal Insolvency Practitioner's fees are ultimately deducted from the dividend payments to the creditors under the arrangement rather than charged to the debtor. As the debtor is availing of a Personal Insolvency Arrangement because of their insolvent position, it is the creditor who is bearing the ultimate cost of the fees and the VAT on the fees.