Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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248. To ask the Minister for Finance if changes in the VAT directive that was agreed in April 2022, which allowed for a reduced rate to apply to the supply of sport or physical exercise classes, have been implemented; and if so, the current VAT rate for the supply of sport or physical exercise classes; and if he will make a statement on the matter. [61978/22]

Paschal Donohoe (Dublin Central, Fine Gael)
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The EU VAT Directive provides that all goods and services are liable to VAT at the standard rate, 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. The EU VAT Directive also allows for historic VAT treatment to be maintained under certain conditions on certain goods and services not provided for in Annex III.

Currently Ireland has a standard VAT rate of 23% and two reduced rates of 13.5% and 9%. Ireland has also retained some historic VAT arrangements, under strict conditions.

It is acknowledged that Annex III of the VAT Directive does allow for the supply of sport or physical exercise classes to be applied at a reduced VAT rate. However, the Deputy should note that there are limits on the number of categories under Annex III to which a reduced rate can be applied. This means therefore that careful consideration needs to be given to the inclusion of a particular category from both a need and a cost perspective. I am happy to have this matter reviewed however as part of next year's Tax Strategy Group process.

As indicated to you in a previous PQ, services consisting of the care of the human body supplied in the course of a health studio business or similar business, such as a yoga studio, are liable to VAT at the reduced rate of 13.5%, due to a historical derogation. In the absence of this derogation, these businesses would pay the standard 23% rate of VAT. Other classes, such as those for karate or judo, are liable to VAT at the standard rate, currently 23%.