Thursday, 17 November 2022
Department of Finance
152. To ask the Minister for Finance if consideration will be given to removing VAT from the supply and installation of solar panels to assist those who wish to be more eco-friendly; and if he will make a statement on the matter. [57061/22]
The VAT rating of goods and services is subject to the requirements of EU VAT law, with which Irish VAT law must comply. In general, the EU VAT Directive provides that all goods and services are liable to VAT at the standard rate (currently 23% in Ireland), unless they fall within the categories of goods and services specified in Annex III of the VAT Directive, in respect of which Member States may apply a lower rate of VAT.
Following amendments to Annex III of the VAT Directive, agreed in April 2022, it now includes a category for "the supply and installation of solar panels on and adjacent to private dwellings, housing and public and other buildings used for activities in the public interest." Outside of the above category in Annex III, the supply of solar equipment, is liable to VAT at the standard rate, currently 23%.
I have decided not to make any change to this rate because of the fact that when solar panels are supplied as part of a “supply and install” contract, they may be subject to VAT at the reduced rate of 13.5%. A “supply and install” contract is where installation services are provided in conjunction with goods such as solar panels. As a result, if solar panels are supplied as part of a “supply and install” contract, then the contract may be subject to VAT at the reduced rate of 13.5%, provided that the value of the goods supplied does not exceed two thirds of the total value of the contract. I believe the reduced rate applied in these circumstances is sufficient.
153. To ask the Minister for Finance the tax liability there would be for an Irish Citizen receiving a gift from a Canadian citizen, who is their sister, resident in Bahrain; and if he will make a statement on the matter. [57066/22]
I am advised by Revenue that it is not possible to provide a definitive response to the Deputy’s question, in the absence of specific details. However, an overview of the possible CAT treatment of the gift he has referred to is set out hereunder.
The Capital Acquisitions Tax Consolidation Act 2003 (CATCA 2003) provides for a charge to capital acquisitions tax to be imposed on individuals who receive gifts and inheritances for less than full consideration where:
- the property gifted or inherited is situated in Ireland, or
- the property gifted or inherited is situated outside of Ireland and:
- the disponer or transferor is resident or ordinarily resident in the State at the date of the disposition, or
- the beneficiary or recipient is resident or ordinarily resident in the State at the date of the gift or inheritance.
While the information provided suggests that the disponer is not Irish resident, it is unclear whether the beneficiary, referred to as an Irish citizen, is resident or ordinarily resident in Ireland. It is also unclear whether the gift is comprised of Irish situated property. It is therefore not possible to confirm whether the gift referred to by the Deputy is within the charge to CAT.
Where a gift (or inheritance) is within the charge to Irish CAT, the tax liability will be computed in accordance with the relevant provisions of CATCA 2003.
For CAT purposes, the relationship between the disponer and the beneficiary determines the maximum amount, known as the “Group threshold”, below which CAT does not arise. Any prior gift or inheritance received by a beneficiary since 5 December 1991 from within the same Group threshold is aggregated for the purposes of determining whether any tax is payable on a benefit. Where a person receives gifts or inheritances that are in excess of the relevant Group threshold, CAT at a rate of 33% applies on the excess benefit. There are three Group thresholds:
- the Group A threshold (currently €335,000) applies, inter alia, where the beneficiary is a child (including adopted child, stepchild and certain foster children) of the disponer;
- the Group B threshold (currently €32,500) applies where the beneficiary is a brother, sister, nephew, niece or lineal ancestor or lineal descendant of the disponer;
- the Group C threshold (currently €16,250) applies in all other cases.
The Group thresholds do not apply to gifts and inheritances between spouses / civil partners, which are exempt from CAT.
In addition, a person may receive gifts up to a total value of €3,000 from any other person in any calendar year without having to pay CAT (the “small gifts exemption”). Gifts within this limit are not taken into account in computing tax and are not included for aggregation purposes. The relationship between disponer and beneficiary is not relevant for the purpose of the small gifts exemption. Where a person receives gifts from a number of different disponers in any calendar year, he/she will be entitled to a small gift exemption of €3,000 in respect of each disponer.
Where a liability to CAT arises on a gift or inheritance and a similar foreign tax is payable on the same property, relief from double taxation may be available. Ireland has two double taxation treaties for CAT purposes, one with the United Kingdom (UK) and one with the United States of America (USA). The convention between Ireland and the US covers inheritance tax in Ireland and federal estate taxes in the US. It does not apply to gift tax. For countries where there is no double taxation treaty in force, unilateral relief may be available in respect of gifts and inheritances of foreign property. Information on the circumstances in which such relief may be available, and how the relief is computed, is available on the Revenue website at www.revenue.ie/en/gains-gifts-and-inheritance/credits-you-can-claim-against-cat/index.aspx.
As it is not possible to provide a definitive view in this case, the individuals concerned may wish to seek guidance directly from Revenue. Contact details for the National Capital Acquisitions Tax Unit are available on the Revenue website at www.revenue.ie/en/contact-us/customer-service-contact/national-capital-acquisitions-tax-cat-unit.aspx.