Gerald Nash (Louth, Labour)
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74. To ask the Minister for Finance the relief that local authorities can seek in regard to their obligation to pay VAT and tax as a local Government body (details supplied); his views on whether some form of VAT relief for local authorities is required given that they are currently being charged VAT for services, including the construction of council owned homes; and if he will make a statement on the matter. [3238/21]

Gerald Nash (Louth, Labour)
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75. To ask the Minister for Finance his plans to put in place a VAT exemption or claim system for local authorities, given that the application of VAT is prohibiting the construction of affordable social homes; and if he will make a statement on the matter. [3239/21]

Paschal Donohoe (Dublin Central, Fine Gael)
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I propose to take Questions Nos. 74 and 75 together.

The VAT rating of goods and services is subject to EU VAT law, with which Irish VAT law must comply.

Under the Directive the supply of construction services is generally liable to VAT at the standard rate. However, by way of special derogation from the general rule, Ireland is permitted to continue to apply a reduced rate, currently 13.5%, to the supply of all construction services.

There are no provisions under the Directive or Irish legislation to permit the application of a VAT exemption to the supply of construction services based on the status of the customer. Where a person makes a supply of construction services to another party those services must be charged to VAT at the appropriate rate. This is so even where the VAT due on those services must, in accordance with legislation, be accounted for by the recipient of the services (under the reverse charge system), rather than the supplier, and regardless of whether the recipient of the services is a public body.

A person who receives construction services, including a local authority, may reclaim the VAT on construction costs incurred where the construction services are acquired and used for the purposes of the recipient’s taxable activities.

Michael Lowry (Tipperary, Independent)
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76. To ask the Minister for Finance the reason guidelines have changed, as of 1 January 2021, concerning benefit-in-kind on company cars and vans during the Covid-19 pandemic (details supplied); if he will request the Revenue Commissioners to reinstate a previous agreement under Revenue eBrief No. 054/20; and if he will make a statement on the matter. [3249/21]

Paschal Donohoe (Dublin Central, Fine Gael)
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In March 2020 Revenue introduced a short-term concessionary measure in relation to the operation of benefit-in-kind (BIK) on employer-provided vehicles having regard to the unprecedented situation arising as a result of the COVID-19 pandemic.

The concessionary treatment applicable to BIK on employer-provided vehicles, along with all other COVID-19 related measures, is kept under regular review by Revenue. In early December 2020, and as the public health restriction at the time began to ease and businesses reopen, Revenue confirmed that the concessionary measure related to employer-provided vehicles would cease to apply on 31 December 2020 and, with effect from 1 January 2021, BIK on same should be calculated in the usual manner.

However, since then, Level 5 public health restrictions have been subsequently introduced. On 24 December 2020, all restaurants, cafés and gastro pubs as well as personal services, such as hairdressers, beauticians and barbers closed, while hotels, guesthouses and B&Bs remain open but are restricted to essential non-social and non-tourist services only. Additionally, on 31 December all non-essential retail as well as gyms, leisure centres and swimming pools closed. For employees, the public health advice is to work from home in all instances unless work is an essential health, social care or other essential service that cannot be done from home.

Having regard to the current public health restrictions Revenue confirmed in eBrief 004/2021, which issued on 14^thJanuary 2021, that the short-term concessionary measures announced back in March will remain in place. This means that, for the time being:

- Where an employer takes back possession of the vehicle and an employee has no access to the vehicle, no BIK shall apply for the period.

- Where an employee retains possession of a vehicle, but the employer prohibits the use of the vehicle, no BIK shall apply if the vehicle is not used for private use.

Records should be maintained to show that the employer has prohibited its use and no such use has occurred, for example communication from employer, photographic evidence of odometer, etc.

Where an employee has a car provided by his or her employer and

1. the circumstances in the previous example don’t apply,

2. limited or reduced business mileage (if any) is undertaken due to the COVID-19 crisis, and

3. personal use is limited

the amount of business mileage travelled in January 2020 may be used as a base month for the purposes of calculating the amount of BIK due. Thus, the percentage applied in the calculation of the cash equivalent, which is based on annualised business mileage, may have regard to the actual business mileage for January 2020, for the current period of the COVID-19 restrictions. Appropriate records should be kept, for example business mileage travelled in January, amount of private use, photographic evidence of odometer etc.

Guidance on the above and other COVID-19 related matters can be found on Revenue’s website*.

Due to the nature of the COVID-19 pandemic it is not known how long any COVID-19 restrictions will ultimately remain in place. Revenue will however continue to regularly review all COVID-19 related matters (including the provisions relating to BIK on employer-provided vehicles) and if any further measures are considered necessary in the future, updated guidance will be made available by Revenue in relation to same as soon as possible.

*https://www.revenue.ie/en/corporate/communications/covid19/compliance-with-certain-reporting-and-filing-obligations.aspx