Neale Richmond (Dublin Rathdown, Fine Gael)
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179. To ask the Minister for Finance if he has considered introducing a 0% VAT rate for the early years sector; and if he will make a statement on the matter. [44669/21]

Paschal Donohoe (Dublin Central, Fine Gael)
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The Vat Consolidation Tax Act 2010 (VATCA) on Schedule 1 Paragraphs (1) (2) and (3), provides for crèche and nursery services exemption for VAT. This exemption also applies to childminding, childcare and child protection/ education services. The exemption applies to childcare provided on a non-profit basis and also to childcare regulated by Parts (VII) or (VIII) of the Child Care Act 1991 even where provided on a profit-making basis. Exemption also covers the provision of related goods.

With regards to the possibility of deducting VAT for the early years sector, Value Added Tax (VAT) is an input tax incurred by an accountable person on purchases made during the course of business. The legislative basis for VAT deductibility is section 59 of the VATCA 2010. Section 59 of the VATCA 2010 sets out conditions required before input VAT may be deducted. To note, section 59 (2) provides that VAT may only be deductible insofar as the goods and services are used for taxable supplies. Only persons making taxable supplies of goods and services or qualifying activities can reclaim VAT charged on goods and services used for the purpose of their taxable trade.