Michael Healy-Rae (Kerry, Independent)
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89. To ask the Minister for Finance if he will reduce the VAT rate on servicing and repairs (details supplied); and if he will make a statement on the matter. [40616/17]

Paschal Donohoe (Dublin Central, Fine Gael)
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I am advised by the Revenue Commissioners 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 provides that Member States may apply either one or two reduced rates of VAT to certain goods and services listed in Annex III of the VAT Directive. In addition, the VAT 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 the servicing and repair of motor vehicles 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 VAT of 12% to the servicing and repair of motor vehicles as proposed by the Deputy.