Pearse Doherty (Donegal, Sinn Fein)
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585. To ask the Minister for Finance the estimated annual savings to an average household by extending the VAT reduction for electricity at 9 percent in 2026; the estimated savings for an average household from a further reduction to 5%; and if he will make a statement on the matter. [46980/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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I am advised by Revenue that traders are not required to identify the VAT yield generated from the supply of specific goods and services on their VAT returns. Therefore, it is not possible to provide estimates of VAT reductions on electricity based on tax returns alone.

However, using third-party household expenditure data and recent population figures, a tentative estimate of the VAT savings on electricity for an average household in 2026 is presented in the table below:

Any proposal for Ireland to introduce a new lower rate of 5% would need to be very carefully assessed as it would present significant tax policy and cost challenges. The introduction of a new reduced rate of 5% would require Ireland to abolish one of its two existing reduced rates (13.5% and 9%) and move all other items at that rate either to the standard rate (23%) or the other reduced rate. Doing this would give rise to increased VAT charges on items that move to a higher rate than their existing one, together with increased Exchequer costs for items moved to lower rates.

Ireland currently applies the second reduced rate of VAT of 9%, to the supply of electricity. The rate of 9% was due to revert to the reduced rate of 13.5% in April 2025, however, it has been extended until 31 October 2025.