Michael McGrath (Cork South Central, Fianna Fail)
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I am advised by Revenue that the total amount of Value-Added Tax (VAT) refunded on touring coaches through the VAT-71 scheme in 2021 and 2022 is provided in the table below. These figures included all VAT refunds made under this scheme.

It should be noted that the majority of buses registered in the VRT system in each of these years are diesel powered, with a very small number powered by diesel hybrid and electric engines.

Michael McGrath (Cork South Central, Fianna Fail)
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I propose to take Questions Nos. 223 and 224 together.

I am advised by Revenue that the VAT treatment of goods and services is subject to EU VAT law, with which Irish VAT law must comply. In general, the Directive provides that all goods and services are liable to VAT at the standard rate unless they are exempt from VAT or fall within Annex III of the Directive, in respect of which Member States may apply reduced rates of VAT.

The Directive allows for historic VAT treatment to be maintained under certain conditions and Ireland has retained the application of the VAT exemption to the transport of passengers and their accompanying baggage. This means that under Ireland’s VAT rules, the supplier of passenger transport services does not register for VAT, does not charge VAT on the supply of their services and, consequently, has no VAT recovery entitlement on their input costs.

In accordance with the EU rules, Ireland may continue to apply this existing, historic VAT exemption on the supply of domestic passenger transport but, for as long as the exemption remains, the conditions under which the exemption was granted cannot be changed. In fact, the introduction of a new entitlement to VAT recovery for the passenger transport sector could only be done if Ireland were to decide to end its historic exemption for the sector and bring passenger transport services into the VAT net; this would then require suppliers to register for VAT and charge VAT on their passenger fares.

Ireland has also maintained a relieving provision, the Value Added Tax (Refund of Tax) (Touring Coaches) Order of 2012, which provides for a refund of VAT on the cost of acquiring “qualifying vehicles” used for the carriage of tourists under contracts for group transport. The order defines qualifying vehicles by reference to their use and physical dimensions as follows:

(a) a single-deck touring coach having dimensions as designated by the manufacturer of not less than 2,700 millimetres in height, not less than 8,000 millimetres in length, not less than 775 millimetres in floor height and with an underfloor luggage capacity of not less than 3 cubic metres, or

(b) a double-deck touring coach having dimensions as designated by the manufacturer of not more than 4,300 millimetres in height and not less than 10,000 millimetres in length.

The order places no restriction on the fuel source of a qualifying vehicle and therefore electric and alternatively powered vehicles that conform to the physical dimensions and designated usage requirements of the order are already eligible under the Refund Order.