Peadar Tóibín (Meath West, Aontú)
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186. To ask the Minister for Finance if he will reduce the excise on HVO. [3974/25]

Peadar Tóibín (Meath West, Aontú)
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187. To ask the Minister for Finance if he will reduce the taxes on HVO to allow to be used in farming and in home heating. [3975/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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I propose to take Questions Nos. 186 and 187 together.

All liquid fuel products, including biofuels such as Hydrotreated/Hydrogenated Vegetable Oil (HVO), are subject to Value-Added Tax (VAT), and to excise duty in the form of Mineral Oil Tax (MOT).

The VAT rating of goods and services is subject to EU VAT law. In general, the EU VAT Directive provides that all goods and services are liable to VAT at the standard rate unless they fall within Annex III of the Directive, in respect of which Member States may apply a lower rate of VAT. Motor fuels such as petrol, including bio-ethanol petrol blends, and auto-diesel are not included in the categories of goods and services on which the EU Directive allows a lower rate of VAT, and so they are liable to VAT at the standard rate, currently 23%. Biofuel and non-food vegetable oils, such as HVO, used to fuel vehicles are similarly liable to VAT at the standard rate and Ireland has no discretion in this regard. However, the Directive does allow a Member State to maintain historic arrangements subject to certain strict conditions and, on this basis, Ireland applies its reduced rate of 13.5% to HVO used as heating fuel.

Ireland’s excise treatment of fuel is governed by EU law as set out in Directive 2003/96/EC, commonly known as the Energy Tax Directive (ETD). ETD provisions on liquid fuels are transposed into national law in Finance Act 1999 (as amended). Finance Act 1999 provides for the application of excise duty, in the form of Mineral Oil Tax (MOT), to liquid products that are used as motor or heating fuels. MOT comprises a carbon component, or carbon charge, which is usually referred to as carbon tax. MOT also comprises a non-carbon component which is often referred to as “excise” or “fuel excise/tax/duty”. It is important to note that both components of MOT are excise.

In accordance with the ETD, MOT law provides for differentiated MOT rates for fuels used for propellant and non-propellant purposes. A liquid fuel used for propellant purposes, such as for powering a road vehicle, is subject to the standard MOT rate. The same fuel used for non-propellant purposes, such as heating or in agricultural tractors and machinery, is subject to a reduced MOT rate. Reduced MOT rates are significantly lower than standard rates. MOT rates are published on Revenue’s website at:

MOT law also provides for biofuel relief, so that fuels such as HVO, are fully relieved from the carbon component of MOT. As a result, where HVO is used in place of auto-diesel for propellant purposes, it attracts the standard MOT rate for auto-diesel, minus the carbon component. HVO used for non-propellant purposes attracts the reduced MOT rate for MGO, minus the carbon component. In the case of blended fuels, the biofuel relief applies to the biofuel portion. The biofuel relief is a policy measure to support more environmentally friendly alternatives to fossil fuels for both propellant and non-propellant uses.

The table below details the current effective MOT rates, net of biofuel relief, applicable to biofuel, such as HVO, used for propellant and non-propellant purposes. MOT rates applicable to auto-diesel and MGO are also included for comparison.

The above rates demonstrate how HVO benefits from significantly lower MOT rates than those applicable to fossil fuels. Further information on MOT on biofuels is published on Revenue’s website at .

In addition it should be noted that taxes such as VAT and MOT only partially contribute to the retail price of any fuel; the retail price is also affected by the fuel’s base cost, international energy market dynamics, exchange rate fluctuations, wholesale contracts, transport costs and individual retail pricing policy. The base cost for HVO is generally higher than for fossil fuels.

Finally, any consideration of reducing the excise rate for HVO must be balanced against competing demands, and as part of the annual Budget and Finance Bill process.