Catherine Murphy (Kildare North, Social Democrats)
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221. To ask the Minister for Finance his plans to review the 9% VAT rate for the hospitality sector between today’s date and the expiration of the 9% rate in February 2023; and if the rate will be abolished on the last day of February 2023. [48228/22]

Paschal Donohoe (Dublin Central, Fine Gael)
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As the Deputy will be aware, the 9% rate for the tourism and hospitality sectors was reintroduced in Budget 2021 from 1 November 2020 to 31 December 2021 at an estimated cost of €401m. This measure was initially extended in Budget 2022 to 31 August 2022 at a further estimated cost of €251m. It was then extended again for another six months until 28 February 2023 at an additional estimated cost of €250m. This was done to provide further support to the tourism and hospitality sectors over the busy November/December period and into the early New Year.

No further extension to this measure is envisaged so the rate which applies to these sectors will revert to 13.5% from 1 March 2023.

The Deputy should note that a review was undertaken of the 9% VAT rate in advance of Budget 2019. This review found that tourism expenditure is more sensitive to income growth and the economic cycle than price changes, which reduces the relevance of the VAT rate applying to the sector.

Should the economic position or tourism demand alter, the VAT rate applicable to tourism and hospitality will be reviewed as part of the budgetary cycle.

Eoin Ó Broin (Dublin Mid West, Sinn Fein)
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222. To ask the Minister for Finance the details of the vacant property tax announced in budget 2023, including when it will be levied; when it will be due for payment; and the proposed exemptions. [48287/22]

Paschal Donohoe (Dublin Central, Fine Gael)
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In Housing for All, the Government has set out a suite of incentives available to encourage re-use of properties and increase the supply of housing. While both Revenue data and preliminary Census 2022 data show that vacancy lies within a range that is considered to be in line with a functioning housing market, it is important that the Government acts to ensure all viable housing stock is made available for use.

Accordingly a new Vacant Homes Tax (VHT) will be introduced in 2023. The VHT will be self-assessed and administered by the Revenue Commissioners. The measure aims to increase the supply of homes for rent or purchase to meet demand, rather than raise revenue.

The tax will apply to long-term vacant residential property and will be paid by property owners. A property will be considered vacant for the purposes of the tax if it is occupied for less than 30 days in a 12-month period.

The VHT will operate by requiring owners of vacant residential properties to file an annual return declaring that their properties were vacant in the applicable 12-month period and indicating the LPT valuation band/valuation that applies to the property. This will be used to assess their VHT liability.

The VHT will share some features with the existing Local Property Tax. The tax will apply to buildings which are residential properties for the purposes of LPT. This means that it will not apply to derelict or properties unsuitable for use as a dwelling which are not captured under the LPT system.

The tax will be charged at a rate equal to three times the property’s existing base Local Property Tax liability – that is, the liability before the application of the Local Adjustment Factor (LAF).

There will be a number of exemptions to ensure property owners are not unfairly charged for temporary periods of vacancy with genuine reasons. These will include:

- properties recently sold or currently listed for sale or rent;

- properties vacant due to the occupier’s illness or long-term care; and

- properties vacant as a result of significant refurbishment work.

It is anticipated that the tax will come into effect in 2023. Further detail on the operation of the tax will become available following the publication of the Finance Bill, on 20 October.