Seán Canney (Galway East, Independent)
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199. To ask the Minister for Finance if he will apply the lower VAT rate which is planned for gas and electricity to include renewable fuels such as native produced fire wood and wood pellets used in heating appliances for people using this sources of renewable fuels to heat their homes; and if he will make a statement on the matter. [41346/24]

Jack Chambers (Dublin West, Fianna Fail)
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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, unless they fall within 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. Currently, Ireland has a standard rate of 23% and two reduced rates of 13.5% and 9%.

A reduced rate of 13.5% already applies to firewood and other solid fuels.

No decision was made in Budget 2025 to apply a further reduced rate of 9% to firewood/wood pellets and wood briquettes. If such a measure was proposed it would form part of the normal Budget and Finance Bill process where the cost and impact could be considered.

The Deputy should note that as with other VAT rate reductions, while the VAT charged must always be correct a company can increase the base price of a product so that the final consumer does not benefit from the VAT reduction.

Finally, it should be noted that lower VAT rates cannot be applied to domestically produced renewable and sustainable fuel. In the application of VAT rates, the Directive does not provide discretion for Member States to consider the degree to which goods or services are sourced domestically or are sourced from other countries, nor does it allow different VAT rates to apply to goods depending on whether they are produced here or are brought into the State from elsewhere.

Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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200. To ask the Minister for Finance if his Department will simplify the VAT code on car sharing, abolishing the two-tier system that exists, and allowing all vehicle hires to be charged at the same rate of 13.5%, in keeping with conditions of the specific VAT Directive, that the rate cannot be less than 12%. [41362/24]

Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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201. To ask the Minister for Finance his views on swapping the word 'consecutive' to 'cumulative' in the Revenue tax manual, that would facilitate a singular VAT charge of 13.5% across all vehicle hires, supporting long-term usage of car sharing and sustainable transport; and if he will engage with Revenue officials on the means to do so. [41363/24]

Jack Chambers (Dublin West, Fianna Fail)
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I propose to take Questions Nos. 200 and 201 together.

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 unless they are exempt from VAT or fall within Annex III of the Directive, in which case lower VAT rates may apply subject to certain rules.

The hiring of vehicles does not come within the goods and services listed in Annex III, so the Directive requires that Member States apply the standard rate, which in Ireland is currently 23%. However, the Directive also allows for historic VAT treatments to be maintained by a Member State under certain conditions, including a strict requirement that the scope of the historic treatment not be extended. On this basis, Ireland has retained its long-standing application of a reduced rate, currently 13.5%, to the supply of hiring vehicles used for a short period of time. The Irish legislation specifies that the reduced rate only applies where the period of the hire agreement together with any previous hiring to the same person – whether of the same vehicle or of another – during the 12 months ending on the commencement of the agreement, does not exceed 5 weeks. The supply of hiring a vehicle for any longer periods is subject to VAT at the standard rate. These statutory provisions and how they are implemented are explained in the Tax and Duty Manual that Revenue has published, and to which the Deputy refers.

There is no discretion under the Directive for Ireland to extend the application of the reduced rate of VAT to the long-term hire of vehicles. Nor does the Directive permit any broadening of the scope of our historic arrangement for short-term hires as the Deputy has suggested, either by explicitly lengthening the qualifying hire period, or by otherwise altering the statutory provision on how a qualifying period is measured.