Written answers

Wednesday, 23 March 2022

Photo of Peter BurkePeter Burke (Longford-Westmeath, Fine Gael)
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44. To ask the Minister for Finance if VAT reclaim on fuel costs will be considered for bus and coach operators given the current prohibitive costs of fuel which is having a severe impact on businesses; and if he will make a statement on the matter. [15399/22]

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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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, currently 23% in Ireland, unless they fall within categories of goods and services specified in the Directive, in respect of which Member States may apply a lower rate or exemption from VAT. In addition, the Directive allows for historic VAT treatment to be maintained under certain conditions and Ireland has retained the application of VAT exemption to the transport of passengers and their accompanying baggage. This means that the supplier does not register for VAT, does not charge VAT on the supply of their services and has no VAT recovery entitlement on costs where such costs are used for the exempt supply of passenger transport.

Ireland may continue to apply the VAT exemption on the supply of domestic passenger transport as governed by Article 371 of the VAT Directive; however, it cannot change the conditions under which the exemption was granted. In accordance with the Directive, a reduced rate of VAT (Ireland currently has two reduced VAT rates, 9% and 13.5%) could be introduced to the supply of passenger transport in place of the exemption that currently applies; this would give the transport operator deductibility in relation to VAT on their business inputs but would involve charging passengers VAT on their fares. Under the Directive it is not possible to apply the zero rate in Ireland to these services, as their supply was never zero rated in the past.


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