John Curran (Dublin Mid West, Fianna Fail)
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185. To ask the Minister for Finance his views on whether it is appropriate to charge VAT on carbon tax and the PSO levy; and if he will make a statement on the matter. [38188/17]

Paschal Donohoe (Dublin Central, Fine Gael)
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VAT is governed by the EU VAT Directive, with which Irish VAT law must comply. Article 78 of the VAT Directive provides that the taxable amount shall include “taxes, duties, levies and charges, excluding the VAT itself”. The amount on which VAT is chargeable, in accordance with section 37(1) of the Value-Added Tax Consolidation Act 2010, is the total consideration receivable by the supplier, “including all taxes, commissions, costs and charges whatsoever” but not including the VAT itself. 

In this respect, in the case of a gas bill, which includes carbon tax, VAT law dictates that VAT should be calculated on the carbon tax element of the bill as well as the charge for the service. Similarly, where an electricity bill includes the PSO levy, VAT is charged on the full amount of the charge to the customer, which includes the PSO levy. The same situation applies in the case of other excises, including for example excises on petrol, auto-diesel, tobacco and alcohol products, where the VAT charged on these goods is also charged on the excise value.

Guidance in relation to the VAT treatment of the total consideration receivable by a supplier is set out in the VAT Guide. This publication is available on the Revenue website at www.revenue.ie.