Thursday, 10 December 2020
Department of Finance
Value Added Tax
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 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. Ireland, in line with the VAT Directive, also maintains several standstill provisions and derogations that allows it to maintain reduced rates, zero rates and exemptions to certain supplies for historical reasons. These standstill provisions and derogations cannot be extended.
In accordance with one such standstill provision, white (including off-white and cream) cylindrical candles and night-lights are zero rated for VAT purposes. Other candles and night-lights, such as those that are decorated, spiralled, tapered or perfumed, are liable to VAT at the standard rate.
I introduced an amendment in Finance Bill 2020 to remove the application of the zero rate of VAT to a category of candles which will consequently provide for the taxation of all candles at the standard rate of VAT, currently 21%. Following discussions at Committee Stage of the Bill and having received numerous representations, I decided on a later date for implementing this change on the basis that this will allow the parties involved to amend their pricing and contracts which would already have been set based on the zero rate of VAT. The proposed amendment will come into effect on 1 January 2022.