Cathal Crowe (Clare, Fianna Fail)
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59. To ask the Minister for Finance if he would consider removing the VAT from building blocks being used to rebuild houses affected by defective blocks to help address rising construction costs; and if he will make a statement on the matter. [6480/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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The VAT rating of goods and services is subject to the requirements of the EU VAT Directive with which Irish VAT law is obliged to comply. In general, the 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 listed in Annex III, in respect of which Member States may apply a lower rate.

Building blocks are not included in Annex III, so under the Directive such products would be subject to the standard rate of VAT, which in Ireland is currently 23%.

However, the Directive allows for a Member State’s historic VAT treatment to be maintained under certain strict conditions. On this basis, Ireland has retained its long-standing application of its reduced rate, currently 13.5%, to the supply of concrete blocks of a kind that comply with the specifications contained in Irish Standard I.S. EN 771-3: 2011 (Specification for masonry units – Part 3 Aggregate concrete masonry units (dense and lightweight aggregates)). There is no discretion under the Directive for Ireland to apply a zero rate of VAT to building blocks.

VAT registered building contractors can deduct VAT incurred on their construction costs (including building blocks) used to provide their construction services (e.g. rebuilding houses). Construction services, including fixtures installed as part of the contract, are subject to a reduced rate of VAT, currently 13.5%, provided the goods cost no more than two-thirds of the contract price. This means the customer will only incur a reduced rate of VAT on the construction service (which will include the building blocks used for that service) rather than incurring a standard rate of VAT on those building blocks not covered by the aforementioned derogation which are used for that service.

Revenue has published detailed guidance on the VAT treatment of construction services on Revenue.ie -

www.revenue.ie/en/tax-professionals/tdm/value-added-tax/part11-immovable-goods/construction-services/construction-servcies.pdf.