Barry Cowen (Offaly, Fianna Fail)
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89. To ask the Minister for Finance the cost of applying a 9% special rate of VAT on the purchase of all new residential properties for use as a primary dwelling only; and the cost for applying a 9% special rate of VAT to such properties with a purchase price below €350,000 only. [29176/16]

Michael Noonan (Limerick City, Fine Gael)
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I am informed by Revenue that, while precise figures on the amount of VAT from the residential housing sector are not separately identified on VAT returns, the cost of applying a 9% special rate of VAT on the purchase of all new residential properties is tentatively estimated at €190m.

As regards the application of the 9% rate to properties with a purchase price below €350,000 only, I am advised by Revenue that 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 (Council Directive 2006/112/EC) sets the framework for the VAT rates in the EU, and provides that Member States must apply a standard rate, which in Ireland is currently 23%. The Directive also allows Member States to apply a maximum of two reduced VAT rates in limited circumstances and, in line with the Directive, Ireland currently applies to reduced rates of 13.5% and 9%. However, there is no provision in the Directive to allow for a rate of VAT to be applied in the circumstances outlined by the Deputy.