Chris Andrews (Dublin Bay South, Sinn Fein)
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161. To ask the Minister for Finance if yoga studios currently in the VAT rate group of 13.5% can be moved into the second reduced rate of 9% in conjunction with other sporting activities and physical education activities; and if he will make a statement on the matter. [13927/20]

Paschal Donohoe (Dublin Central, Fine Gael)
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The VAT rating of goods and services is subject to the requirements of the EU VAT Directive, with which Irish VAT law must comply. In general, the VAT Directive provides that all goods and services are liable to VAT at the standard rate unless they fall within Annex III of the Directive, in respect of which Member States may apply either one or two reduced rates of VAT. The “use of sporting facilities” is specifically listed in Annex III which therefore allows Ireland to apply the second reduced rate, currently 9%.

Services consisting of the care of the human body supplied in the course of a health studio business or similar business, such as a yoga studio, are not listed in Annex III and therefore would in general be subject to the standard rate. However, the Directive allows for historic VAT treatment to be maintained under certain conditions and Ireland has retained the application of the reduced rate of VAT, currently 13.5%, to the services of yoga studios. This is known as a ‘parked rate’ and the continuation of this reduced rate application is conditional on the rate being no less than 12%. Therefore, there is no discretion under the Directive to apply the 9% rate to these services.

Anne Rabbitte (Galway East, Fianna Fail)
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162. To ask the Minister for Finance if he is considering the introduction of a VAT claim back on the purchase of materials related to crèches reopening post Covid-19; and if he will make a statement on the matter. [14013/20]

Paschal Donohoe (Dublin Central, Fine Gael)
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I am advised by Revenue that the VAT rating of goods and services is subject to EU VAT law, with which Irish VAT law must comply. In accordance with the VAT Directive, crèche services are exempt from VAT. As is the case with all VAT exempt businesses, crèches are not entitled to reclaim VAT on the purchase of materials used for their VAT exempt supplies, nor are they required to charge VAT on their fees.