Written answers

Wednesday, 5 October 2016

Department of Finance

VAT Rate Reductions

Photo of Michael Healy-RaeMichael Healy-Rae (Kerry, Independent)
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98. To ask the Minister for Finance if he will support the promotion of modernised technology and safety features in Irish vehicles by lowering the cost of vehicle maintenance and lowering the VAT rate from 13.5% to 12%; and if he will make a statement on the matter. [28880/16]

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 VAT Directive provides that Member States may apply either one or two reduced rates to certain goods and services listed in Annex III of the Directive. In addition, the Directive allows for historic VAT treatment to be maintained under certain conditions on certain goods and services not provided for in Annex III.

Ireland currently operates two lower rates of VAT, 13.5% and 9%, as permitted by the Directive. The VAT rate applicable to vehicle maintenance is the reduced rate 13.5% and under the Directive the rate applicable to such services cannot be reduced below 12%. As Ireland already applies the maximum allowable number of reduced rates, it is prohibited under the VAT Directive from introducing a third reduced rate of 12% to vehicle maintenance supplies as proposed by the Deputy.


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