Erin McGreehan (Louth, Fianna Fail)
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261. To ask the Minister for Finance if his Department has considered reducing the VAT rate on home energy upgrades to support households in decarbonising and retrofitting their homes. [31868/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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The VAT rating 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 fall within Annex III of the Directive, in respect of which Member States may apply either one or two reduced rates of VAT and can also apply a zero rate to certain goods and services. Ireland currently operates two reduced rates of VAT, 13.5% and 9%, as permitted by the Directive.

As the Deputy is aware following amendments to Annex III of the VAT Directive, agreed in April 2022, the Government introduced a zero rate for the supply and installation of solar panels on private dwellings.

The only other area where Annex III applies some latitude in relation to reduced rates for home energy upgrades is in relation to heat pumps. Whilst a zero rate of VAT cannot be applied there is scope to reduce the VAT rate in highly efficient low emissions heating systems to a reduced VAT rate. In Ireland that would mean a rate of 9% or 13.5%. This reduced VAT rate of 9% was introduced with effect from 1 January 2025.