Paschal Donohoe (Dublin Central, Fine Gael)
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In Budget 2021, I introduced a temporary reduced rate of VAT, 9%, to apply to tourism and hospitality related services from 1 November 2020 to 31 December 2021, and the Finance (Covid 19 and Miscellaneous Provisions) Bill currently before the House proposes that this temporary rate continue until 31 August 2022.

The Deputy is asking that this arrangement be applied to the music and entertainment industry. I can assure the Deputy that the provision I introduced in 2020 does already apply the temporary 9% VAT rate to admission fees for cinemas, theatres and musical performances. The Deputy will also be interested to know that, under long-standing provisions in Irish legislation, admission fees to live theatrical or musical performances are actually exempt from VAT, subject to certain conditions.

I am advised by Revenue that the VAT treatment of admissions to theatrical or musical performances is dependent on the type of event and whether there are facilities available for the consumption of food or drink (including alcohol) during all or part of the performance. In broad terms -

- if there is a live performance and if food or drink are not available, then the admission tickets are exempt from VAT.

- If there is a live performance with food or drink available, then the admission tickets are subject to the reduced rate of VAT, currently 9%.

- for venues and events where the entertainment, if any, is not a live theatrical or musical performance, including dances, discos, nightclubs and pubs, the standard rate of VAT, currently 23%, applies to admission charges.

Where a music band is being hired for a function, such as a wedding, the hiring service is subject to the standard rate of VAT, currently 23%.

Paschal Donohoe (Dublin Central, Fine Gael)
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The VAT rating of goods and services is subject to EU VAT law, with which Irish VAT law must comply. Under the EU VAT Directive it is not permissible to differentiate between the supply of different types of residential property, such as apartments and housing, for the purpose of applying VAT rates. Nor is it possible to change the VAT rate for first-time buyers.

While most Member states apply the standard rate to construction services, Ireland already applies a 13.5% reduced rate of VAT to all construction services under a derogation from the EU VAT Directive.

I am advised by the Revenue Commissioners that under the EU VAT Directive and Irish VAT legislation the supply of building materials is liable to VAT at the standard rate, currently 23%. Member states are not permitted to apply a VAT rate lower than the standard rate to building materials. However, Ireland by way of derogation from the general rule is permitted to continue to apply a reduced rate, currently 13.5%, to the supply of ready-to-pour concrete and certain concrete blocks.

Property developers charge VAT on sales of developed residential property at the 13.5% rate but are entitled to recover the VAT incurred in the development of that property, including VAT on building materials. As such, a reduction in the rate of VAT on building materials would not reduce building costs.