Written answers

Thursday, 10 July 2025

Photo of Gillian TooleGillian Toole (Meath East, Independent)
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200. To ask the Minister for Finance the reason a VAT rate, comparable to Northern Ireland, is not included as a stimulus measure for home building in Ireland; and if he will make a statement on the matter. [38645/25]

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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Under the EU VAT Directive, with which Irish VAT legislation must comply, it is not possible to apply a VAT zero rate to the construction materials or to the construction of new buildings. The UK had a historical derogation to allow for a zero rate to apply to specific building projects (e.g. new builds meeting specific criteria such as being designed as a dwelling and which will only be used for a relevant charitable purpose).

It is not possible for Ireland to avail of such a historical derogation to avail of a zero rate for construction of housing. It should be noted that the 13.5% rate applies to all construction in Ireland which is also the result of a historical derogation as most Member States must apply a standard rate of VAT to construction with a reduced rate of VAT only available for the supply and construction of housing as part of a social policy.

It should be noted that following the UK departure from the EU they are no longer bound by the VAT Directive when it comes to the setting of reduced or zero rates.

Photo of John LahartJohn Lahart (Dublin South West, Fianna Fail)
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201. To ask the Minister for Finance to outline the thinking behind changes in the local property tax regime [38784/25]

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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The Finance (Local Property Tax and Other Provisions) (Amendment) Act 2025 provides for a number of changes to the structure of Local Property Tax (LPT) in advance of the revaluation of properties which will take place on 1 November 2025.

Data from the Central Statistics Office show that property prices increased by 24 per cent nationally between November 2021 and April 2025. If no changes were made to the LPT charging mechanism, Revenue estimated that approximately 70 per cent of households would go up at least one valuation band as a result of revaluation on 1 November this year, thereby significantly increasing their annual LPT liability for 2026.

Accordingly, Government decided to amend the LPT charging mechanism in order to prevent a significant increase in liabilities for most households. By widening the valuation bands by 20 per cent, an estimated 96 per cent of properties in the State will remain in their existing band.

The base LPT rate was amended so that those who remain in their same band contribute a small amount more than they do at present. Properties valued under €1.26 million will see their base LPT charges will increase by 5 to 6 per cent. For properties between €1.26 million and €2.1 million in value, base LPT charges will increase by 7 to 14 per cent.

By asking property owners to pay small amount more, yield from LPT is projected to increase by 8 per cent in 2026, which will go towards local services.

Other changes that were made to the LPT regime include increasing the income thresholds to qualify for a deferral of LPT. These thresholds were increased to account for inflation, wage growth and increases in State payments since 2021. This decision follows a recommendation made by the 2019 Review Group on LPT.

A change is also being made to the Local Adjustment Factor, which allows local authorities to vary the amount of LPT collected in their area. From 2027 onwards, local authorities will be able to vary LPT collected upwards by a maximum of 25 per cent. This is to give local authorities greater flexibility in relation to the LPT yield for their respective areas.

The Programme for Government commitment in relation to LPT is to “ensure fairness and stability in Local Property Tax payments and continue to retain revenue collected locally in the same local authority”. Together with my Government colleagues, I have sought to deliver on this commitment to ensure fairness for LPT through the changes we have made to the tax.

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