Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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301. To ask the Minister for Finance the estimated annual cost of jet fuel VAT and excise exemptions; and if he will make a statement on the matter. [32670/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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Ireland’s excise duty treatment of aviation fuel is governed by European Union 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 Chapter 1 of Part 2 of Finance Act 1999 (as amended). This legislation provides for the application of excise duty in the form of Mineral Oil Tax (MOT) on liquid fuels, including those used for aviation. Current and historic MOT rates are published on Revenue’s website at www.revenue.ie/en/tax-professionals/tdm/excise/excise-duty-rates/energy-excise-duty-rates.pdf.Heavy oil, or aviation kerosene/jet fuel, is the most commonly used fuel for commercial aviation. As required by the ETD, Ireland applies a full MOT exemption to jet fuel used for commercial aviation, including domestic, intra-community and international flights. I am advised by Revenue that based on volumes declared as exempt on MOT returns, the total MOT relieved on jet fuel used for commercial air navigation in 2024 is estimated at €944.1m. Light oil, or aviation gasoline, is much less commonly used in commercial aviation. Aviation gasoline used in commercial aviation, including domestic, intra-community and international flights, is partially relieved from MOT, with the relief operating by way of repayment. I am advised by Revenue that based on repayment claims, the total MOT relieved on aviation gasoline in 2024 was €0.1m. In relation to Value Added Tax (VAT), 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 EU VAT Directive provides that all goods and services are liable to VAT at the standard rate unless they fall within certain categories to which Member States may apply a lower rate or an exemption. Furthermore, the EU VAT Directive allows a Member State to maintain historic arrangements subject to certain strict conditions.The supply of aviation fuels is not included in the categories of goods and services on which the EU VAT Directive allows a lower rate of VAT. Instead, the EU VAT Directive allows an exemption from VAT on the supply of goods for the fuelling of aircraft used by airlines operating chiefly on international routes (e.g. an international airline). Ireland also maintains an existing historic arrangement for aviation kerosene/jet fuel.

On this basis, Ireland applies the zero rate of VAT to aviation fuels, where they are supplied for fuelling an aircraft used by airlines operating for reward chiefly on international routes (e.g. an international airline). However, different rates apply if these fuels are supplied for other purposes or customers (e.g. private planes). In these cases, the standard rate of VAT (currently 23%) applies to supplies of aviation fuels, other than aviation kerosene/jet fuel where the reduced rate of VAT (currently 13.5%) applies as provided for under the historic arrangement.

I am further advised by Revenue that traders are not required to identify the VAT generated from the supply of specific goods and services on their VAT returns. Therefore, it is not possible to provide an estimate of VAT forgone on the supply of aviation fuels.