Paschal Donohoe (Dublin Central, Fine Gael)
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The VAT rating of goods and services is subject to the requirements of EU VAT law, with which Irish VAT law must comply. In accordance with Irish VAT legislation, oral medicines (for human consumption), licensed/authorised by the Health Products Regulatory Authority, are liable to VAT at the zero rate. Ireland’s application of the zero rate of VAT to oral medicines derives from the derogation under Article 110 of the EU VAT Directive. Under that provision, Ireland may retain the zero rate on goods and services which was in place on 1 January 1991. As oral medicines were liable to the zero rate of VAT on that date, Ireland continues to apply this rate but may not extend its scope. I am advised by the Revenue Commissioners that as nicotine patches cannot be considered an oral medicine there is no discretion, under the Directive, to zero rate these products.