Michael McGrath (Cork South Central, Fianna Fail)
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74. To ask the Minister for Finance the estimated full year cost of introducing a zero rate of VAT for the construction of new residential homes; and if he will make a statement on the matter. [31976/17]

Michael McGrath (Cork South Central, Fianna Fail)
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75. To ask the Minister for Finance the estimated full year cost of introducing a 9% rate of VAT for the construction of new residential homes; and if he will make a statement on the matter. [31977/17]

Paschal Donohoe (Dublin Central, Fine Gael)
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I propose to take Questions Nos. 74 and 75 together.

I am advised by the Revenue Commissioners that the VAT rating of goods and services is subject to EU VAT law, with which Irish VAT law must comply. Under the EU VAT Directive 2006/112/EC it is not possible to introduce a zero rate of VAT on any good or service that had not already applied at the zero rate of VAT on and from 1 January 1991.  As the services of construction of residential property was not zero-rated for VAT purposes in Ireland on and from that date, the zero rate cannot now be applied the service.

With regard to the application of the 9% VAT rate, it is tentatively estimated that introducing a 9% VAT rate specific to residential construction could cost in the region of €240m. This is based on an extrapolation from a number of data sources, including residential completions, residential construction projects under current development and the average selling price of new residential homes.