Michael Cahill (Kerry, Fianna Fail)
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524. To ask the Minister for Finance his views on VAT in relation to funeral and undertaker materials (details supplied); and if he will make a statement on the matter. [45787/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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I am advised by Revenue that the VAT rating of goods and services is subject to EU VAT law, with which Irish VAT law is obliged to comply. In general, the VAT Directive provides that all goods and services are liable to VAT at the standard rate, unless they are either specifically exempt from VAT or they fall within the categories listed in Annex III of the Directive, to which Member States may apply lower VAT rates subject to certain rules.

Annex III includes the supply of cut flowers and ornamental foliage, and Ireland applies its reduced rate of VAT, currently 13.5% to these supplies. Annex III does not include artificial flowers/wreaths and, therefore, they are subject to VAT at the standard rate, which in Ireland is currently 23%.

Importantly, however, the Directive also allows for historic VAT treatment to be maintained by a Member State under certain conditions and, on this basis, Ireland has retained its application of an exemption from VAT on the provision of services of a funeral undertaker. This means that under Ireland’s VAT rules, suppliers of funeral undertaking services do not register for VAT, do not charge VAT on the supply of their services and, consequently, have no VAT recovery entitlement on their input costs. The VAT exemption includes ancillary goods – such as flowers and wreaths (whether real or artificial), as well as coffins and urns – where provided as part of the funeral undertaking services.

The Deputy has raised the matter of VAT recovery for materials used in the provision of funeral undertaking services. In accordance with the EU VAT rules, this could only be done if Ireland were to decide to end its historic VAT exemption for the sector and bring funeral undertaking services into the VAT net; this would oblige suppliers to register for VAT and require them to charge VAT on their funeral undertaking services.