Pearse Doherty (Donegal, Sinn Fein)
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166. To ask the Minister for Finance if Ireland enjoys exemptions pursuant to Article 395(1) of Directive 2006/112/EC of 28 November 2006 or derogations more generally from EU VAT rules; if so, the exemptions in this regard; and if he will make a statement on the matter. [4001/19]

Paschal Donohoe (Dublin Central, Fine Gael)
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Ireland avails of the following exemptions provided for under Articles 394 and 395 of the EU VAT Directive (originally under Article 27(1) to (5) of the 1977 Sixth VAT Directive):

1. The exemption of fish supplied by fishermen to taxable persons, including buyers from outside Ireland, regardless of turnover threshold.

2. The treatment of supplies of zero-rated food products as supplies of a service when catered, resulting in the application of the 13.5% VAT rate.

3. In the case of goods made by a contractor from materials supplied by the customer, if the materials are taxable at a lower rate than the service rate applicable, this derogation allows for the value of the materials to be taxed at a rate equal to the difference between the higher and lower rates.

4. Relief from VAT to foreign taxable persons in receipt of taxable Irish services, subject to the foreign trader being registered for VAT or proving economic status.

5. Simplification arrangement for retailers, who can calculate their tax liability with reference to cash receipts rather than invoices issued.

6. A refund to non-registered farmers of the VAT charged on certain buildings and the drainage or clearing of land.

7, The application of zero-rating to fertilizers, animal feeding stuffs and seeds.

8. The two-thirds rule, which provides that a service which is normally taxable at the reduced rate, will be taxable at the rate applying to any goods provided in the course of providing that service, in certain circumstances.

Ireland also enjoys other derogations from the general VAT rules, as provided for under the VAT Directive. Articles 109 to 122 provide for the entitlement to apply the zero rate or a reduced rate of VAT to certain supplies of goods or services, where such rate was applied in a Member State prior to 1 January 1991. Ireland uses this derogation to continue to apply the zero rate to such supplies as printed books, human or oral medicines, food and children’s clothes and to apply a reduced rate to such supplies as construction services, domestic fuels, general repair and maintenance services and residential housing. The full list of goods and services operating under derogated VAT rate treatment in Ireland is contained in Part 2 of Schedule 2, and Part 2B, Part 3 and Part 4 of Schedule 3 to the VAT Consolidation Act 2010.

Historical VAT rate derogation is also operated by Ireland to certain services in accordance with Article 371 of the VAT Directive, which allows the continuation of VAT exemption where those services were exempt in a Member State as at 1 January 1978. The supply of passenger transport, public water services and admissions to sporting events are exempt from VAT under this derogation.

Finally, Ireland also avails of a derogation, as provided for under Article 17 of the VAT Directive, to restrict the right to deduct VAT in respect of expenditure on passenger cars, petrol, entertainment, accommodation and food or drink.