Written answers

Tuesday, 24 May 2016

Department of Finance

Private Bus Operators

Photo of Michael Healy-RaeMichael Healy-Rae (Kerry, Independent)
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102. To ask the Minister for Finance the options available to private bus operators (details supplied); and if he will make a statement on the matter. [11336/16]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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The transport of passengers and their accompanying baggage is exempt from VAT in Ireland under paragraph 14(3) of Schedule 1 to the VAT Consolidation Act 2010. Therefore, the services of private bus transport operators are exempt from VAT. Persons whose services are exempt from VAT are not required to register for VAT or charge VAT on the supply of their services. This means that they cannot recover VAT in relation to their business costs including those referred to by the Deputy such as the purchase of fuel, lubricants and tyres.

While private bus operators whose services are VAT exempt cannot recover VAT incurred on the purchase of goods and services, I would point out that there is a special provision to allow a refund of VAT incurred on the purchase of touring coaches. Under VAT Refund Order S.I. 266 of 2012, coach operators who are exempt from VAT may, subject to the conditions of the order, be entitled to a refund of the VAT paid on touring coaches that are no more than 2 years old and are within specified dimensions.

The Deputy has pointed out the different VAT treatment of private bus operators between Ireland and the UK. The VAT rating of goods and services is subject to the requirements of EU VAT law, primarily Council Directive 2006/112/EC. VAT law in Ireland and the UK must comply with the EU VAT Directive. As passenger transport was exempt in Ireland on 1 January 1978, it is possible under the VAT Directive to continue to apply that exemption. As passenger transport services were charged at the zero rate in the UK on 1 January 1991, the UK are entitled to continue to apply a zero rate to passenger transport services. It is not possible under EU law for Ireland to apply a zero rate to the services of private bus operators as we did not apply a zero rate to them in 1991. Further to this, the rate of excise duty applied to diesel is 48c per litre, this compares favourably against the rate of excise in Northern Ireland which is 74c (as of 12 May 2016). Revenue conducted a cross border price survey on 12 May and a litre of diesel was 22c more expensive in Northern Ireland. I have also introduced a diesel rebate scheme which offers a partial refund of excise, depending on the price of fuel, for qualifying road transport operators including passenger transport operators.

Information furnished on statutory VAT returns does not require details of the VAT yield from particular sectors to be identified. It is therefore not possible to give an estimate of the loss to the exchequer of VAT if the private bus operators had an entitlement to reclaim the VAT incurred on their business costs. However, a flat rate of €200 Vehicle Registration Tax applies to Category C vehicles which includes minibuses and large buses. The motor tax rates applied to large public service vehicles are subject to relatively favourable rates.  The current rates are contained in the following table:

Seating CapacityAnnual €
9 - 20154
21 - 40202
41 - 60403
61 or more403

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