Paschal Donohoe (Dublin Central, Fine Gael)
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As the Deputy may be aware, the European Commission published a proposal in January 2018 in relation to VAT rates. The proposal as published provides significantly greater flexibility to all Member States to apply reduced rates. The current system (in Annex 3 of the Directive) operates a set list of goods and services to which a reduced rate may apply. The new proposal allows Member States to apply lower rates to a wider set of goods and services but introduces a list of goods and services which must be charged at the standard rate – a “negative list.” The purpose of the negative list is to ensure the application of a standard rate to supplies where there may be a risk of distortion of competition.

This proposal remains under discussion at Working Party level.